While the application of blockchain technology holds great promise within the financial sector —particularly in payment systems and potential central bank digital currencies (CBDCs) — the CBC noted that crypto-assets remain highly volatile, speculative, and vulnerable to fraud. Despite the introduction of EU Regulation 2023/1114 on markets in crypto assets (MiCA Regulation) which improved transparency and efficiency within the area of crypto assets, the area still suffers from important risks which include inadequate regulatory safeguards and financial crime exposure.

The CBC clarified that crypto assets are unsuitable as reserve assets, and no Cyprus bank invests in them.

The CBC urges investors to exercise caution when they invest in crypto assets in order to avoid substantial financial losses and fraud.

The official announcement of the CBC can be found here.