This article provides a summary of the insights provided during BLOCK.CO’s 4th Live Webcast on the topic of Digital Transformation Of The Public Sector & The Upcoming Legislation Of Blockchain Technology In Cyprus.
Adoption of Blockchain and other disruptive technologies has flourished particularly in smaller nations that represent interesting hubs where innovations are more easily tested and applied. With blockchain in Public Sector, we’ve already experienced the commitment of small countries like Switzerland, Malta, Singapore, and Cyprus more recently. In just a few years, the small island in the Mediterranean known for tourism and offshore bank accounts has become a desirable fintech jurisdiction for investors and global businesses, due to the vivid interest of the Cypriot government towards new technologies, blockchain and AI imprimis.
With a highly favorable tax environment and the financial incentives available, Cyprus is shining as a hotspot for blockchain businesses and entrepreneurs from all over the world. In 2018 a Declaration was signed by EU member states to promote blockchain in public sector use across its members. By that time, Cyprus had already expressed interest in the technology with a series of initiatives. Cyprus’s partnership with Singapore-based blockchain platform VeChain was sealed to push forward the development and adoption of the technology. In addition, the Cyprus Blockchain Association was created while the University of Nicosia was involved in the development of the technology by offering courses and Master’s degrees on blockchain and cryptocurrencies, and by also practically using blockchain technology to validate academic documentation through BLOCK.CO.
The Cyprus Securities and Exchange Commission (CySEC) launched a blockchain innovation hub with other organizations and associations to support the development and implementation of technologies that can facilitate administrative operations and improve citizens relations with authorities. In 2019, Cyprus’ cabinet published its National Strategy on Distributed Ledger Technologies in order to provide a platform for both public sector and private initiatives employing blockchain applications. With such an exciting background in mind, BLOCK.CO arranged its fourth webcast that was held on Tuesday 21st July at the presence of prominent guests, who are all helping the government of Cyprus, develop and adopt the disruptive technologies in its administrative, economic and legal activities.
How are corporates, governments, and citizens impacted by the changes in legislation?
Hosted by brilliant Christiana Aristidou, a Technology Lawyer and Digital Transformation Specialist, BLOCK.CO along with Cyprus’s Deputy Minister for Research, Innovation & Digital Policy, Mr. Kyriacos Kokkinos, and international Blockchain experts Jeff Bandman and Steve Tendon joined forces in the webcast to discuss the enormous potential of Blockchain technology in both the public and private sectors.
The guests’ common path into blockchain was the early and skeptical discovery of Bitcoin followed by years of research and a more in-depth understanding of the technology which led them to embrace it in different ways.
Jeff became interested in the legal implications and the regulatory framework that would arise with the technology. His firm Bandman Advisors has recently been appointed by the Cyprus Government to draft its legislation on Blockchain & DLT.
Steve was a software engineer who moved to a management consulting role and had founded TameFlow when he learned about technologies like Ethereum and how its smart contracts could be used in governance. He became a consultant for Malta to help the country benefit from blockchain adoption and gave a major contribution to the drafting of Malta’s National Strategy on Blockchain.
The Deputy Minister, Mr. Kokkinos is the person responsible for the design and implementation of Cyprus’s Blockchain and DLT strategy:
“We want to convert the innovation researching tools into pillars for our economy to encourage more prosperity for our society. Blockchain and DLT are essential for digital transformation, a key player in a globalized economy. In June 2019, the Council of Ministers of Cyprus approved a strategy for DLT and blockchain, and part of my job is to facilitate the detailed implementation through both technical and legal perspectives. Jeff Bandman has worked to help with the legal, I help with the strategic side.”
The strategy document indicates that “The Republic of Cyprus, in line with the European and global trends of change and progress, strives to create the right environment for enterprises, companies, services, and investments by adopting innovative practices and procedures.”
“We’re all closely monitoring discussions at the EU level -continues the Deputy Minister- in order to meet regulatory standards and we’re considering them for our strategy. We’re working on achieving maximum compatibility with the EU legislation and encouraging all members to arrange a deployment of blockchain in all fields.”
Governments have come to realize they must provide all tools available and needed for digital transformation in the public sector, to ultimately best serve its business communities and citizens alike. The intricacies of bureaucracy speed up the need for new technologies, and in the pandemic era, access to digitalization is proving crucial to meet future challenges especially in areas where blockchain can help like healthcare, supply chain, and digital identity implementation. Jeff believes that blockchain can start by keeping consistency between democracy and trust, through the transparency that it can provide. “For example tracing the origin of funds and their allocation, will facilitate trust which is the basis of a distributed and decentralized environment”.
According to Steve: “Blockchain can be interesting from different perspectives and I also believe trust is crucial. While we normally trust governments and authorities to manage most of our public and private life, with blockchain we have the chance to take it all back and shift to a sovereign approach. Starting with your own identity, with healthcare records, licenses, voting, and so forth, self-sovereignty will identify who you are, not a government. We’ve started building SOV, a stablecoin that will soon be legal tender, detached from a central bank but built on the chain and established by the algorithm. For the first time, this new monetary policy will remove the discretionary power of central banks, something that was not even conceivable before blockchain. The power is back to the people”.
With the first upcoming legislation in Cyprus, Christiana asked Jeff if he could share what this new law will involve, and what will be regulated.
“We’ve been working very hard on drafting and evaluating the different perspectives. Most efforts and resources are being dedicated to a definition and classification of the different digital assets, to the legal certainty around smart contracts, and to protect vulnerable consumers. From a business perspective, we’re still evaluating company laws, how blockchain can assist the full operational process, which criteria will help mainstream adoption of blockchain in Cyprus”.
The results of the 2019 strategy plan were supposed to be released in April but the Covid-19 crisis has delayed the works and they’re now expected in September this year. “The lesson we can learn from pioneer Malta -informs us Steve, who played a pivotal role in shaping Malta’s blockchain reputation- is to set up the right expectation and find a balance between the level of ambition and what is practical. Malta became a blockchain island because it made efforts to regulate the technology, but the challenge is to make regulation fair and accessible to everybody, the community, and the professionals so that innovation is encouraged at all times.”
What will the future hold for Cyprus? Will it be the new blockchain island?
“We have a promising technology -continues Steve Tendon- and collaboration between countries should be encouraged in terms of legislation and regulations, and the EU should take a more active role. It’s not a competition but a collaboration between Malta, Cyprus, and other geographies where a regulatory framework that promotes innovation should reflect and embrace the changes that new technologies bring to a globalized world.”
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