CySEC Chairwoman Eyes Crypto, But Awaits More Token Development Before Rushing Rules


Chairwoman of Cyprus Security and Exchanges Commission (CySEC), Demetra Kalogerou, has recently given a complete look at their current stance on all matters cryptocurrencies and blockchain technology.

Like most responses, Kalogerou emphasized greatly on the need to have a larger picture, that is, a complete understanding of the tech at hand along with its strengths, weaknesses, opportunities and threats (all of which apply to cryptocurrencies as well).

Finance Magnates has recently shared Kalogerou’s viewpoint, and it doesn’t look disappointing, better yet, it is definitely directed towards progress. The following are the main points addressed by the Chairwoman herself.

Reasons Why CySEC Created The ‘Crypto Hub’

Announcement of CySEC’s Crypto Hub was first revealed back in July 2018, and it wasn’t until recently that Kalogerou explained the reason for such an endeavor. The need for blockchain technology comes from the fact that financial services are gradually developing. In today’s society, convenience is highly valued, and its technology that brings the people closer to the services at hand.

According to Kalogerou, the Crypto Hub reflects the yearn for “progress in line with the demands of today’s and tomorrow’s investor. A Hub allows to experiment new technology in a safe space and understand the risks and benefits before potential investors are exposed to new investment products.”

No Perks For Firms Onboarding The Crypto Hub?

The Chairwoman made it strictly clear that there will be no perks attached in joining the Crypto Hub. Instead, she considers the opportunity as being a two-way street where firms are given a platform in which they can “share ideas about new financial technology at the same time as identifying opportunities for our own regtech innovation.”

The main point that Kalogerou underlines here is understanding the regulatory specs of blockchain technology and cryptocurrencies, as the platform will assistance in understanding “how existing regulation applies to new products or business models, whilst identifying what regulatory frameworks and licensing requirements might be needed […] to ensure safety and security of the end-investor.”

Blockchain Gives Opportunities To Re-Evaluate How Society Works

CySEC is clearly for blockchain technology, as the Chairwoman highlighted the different use cases that come out of blockchain technology. She pointed out its versatility, noting that cryptocurrencies aren’t the only ones to benefit from the tech, but also “tracing shareholding certificates, recording transfers in ownership, or voting rights.” What remains unclear are its trustworthiness and its ability to “overcome the challenges associated with mainstream tool for financial markets,” says Kalogerou.

To further evaluate the challenges, Kalogerou shared that CySEC is “open for discussing with experts on this area […] to better understand the benefits of blockchain technology may bring to financial markets.” To move forward in this approach, CySEC is supposedly part of Blockchain Technology for Algorithmic Regulation and Compliance (BARAC), which looks at blockchain from inside out, i.e. from a technical, legal and managerial point of view.

CySEC Joins Several Financial Regulators For Innovation And Investor Protection

In terms of joining forces with financial regulators like FCA, ASIC and ISA to name a few, Kalogerou argues that the reasons are simple: eliminating frauds, learning from failures and preventing them and ensuring investors are protected. As per her quotes, one of the purposes is “seeking redress for past failures and criminal wrongdoing […] and introducing new rules to curtail repeated non-compliance.”

CySEC Keeps An Eye On Crypto-Related Products?

CySEC is continuously working towards evaluating the risks and rewards of the crypto sphere and its related products. According to Kalogerou, the CySEC is watchful of the types of products firms are coming out with and are assessing whether they fit the rules of the European Union. If they do, she doesn’t see why such innovation would be encumbered to begin with.

However, she doesn’t want to “act prematurely as our primary goal is take stock and not cause any dislocation in an otherwise smooth-functioning of our capital market.”

Speaking On Cryptocurrencies Altogether

Kalogerou addresses cryptocurrency’s non-regulation when discussing its matters. Because of its current situation and only being “MiFID compliant”, she revealed that said firms would have to follow “strict limitations in relation to the percentage of their turnover attributed to such activity,” along with the selling of said products.

While many countries have been friendly towards cryptocurrencies, Kalogerou stands firm on CySEC’s prominence on regulation. She argues that the way in which ICOs are systematized also play a part in whether they abide by EU legislation. While she is conscious of the interest among “retail and professional investors”, at the end of the day, she doesn’t see any motivation in rushing into such matters when they aren’t “fully developed”.

As for CySEC’s position on the digital assets and its respective technology, holding such a reserved outlook on cryptocurrencies does not signify riddance of an innovative technology things, but more so on how investors and consumers can be protected in the event of a misshapen. In particular, CySEC claims to represent best practices, which means looking out for “client identification procedures and safeguarding clients’ rights,” to name the least.

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