Cyprus banks have reported an unexpected €400 million in cryptocurrency assets and may be better-placed to invest them in the future, according to a new report by a consultancy.
Cyprus’ central bank said on Thursday that a large proportion of its bank deposits had been made in cryptocurrency, which has risen rapidly since the country was hit by a wave of money laundering in 2015.
A total of 8.5% of Cypriots bank accounts held in cryptocurrencies were held in digital currencies, according a statement from the Central Bank of Cyprus (CBC), which was published by the European Bank for Reconstruction and Development (EBRD).
The total of 7.6% of the bank accounts were in digital assets, according the report.
The report by consultancy EBIT, released on Thursday, said the CUB’s cryptocurrency holdings may have risen by between 2.6 million and 3.8 million euro ($3.2 million to $4.1 million) since the start of 2018.
Cypriots are expected to see the number of their digital currencies rise by at least 20% this year, according EBIT.
It is unclear what the total value of Cyprus bank accounts may have been in 2019.
In a separate report, the European Central Bank (ECB) said it would start to test whether the country can be a destination for its citizens’ digital currency deposits.ECB deputy chief economist Mark Carney said the ECB was “considering the potential of Cyprus as a source of new digital currency inflows into the eurozone, given the importance of the Cyprus stock market in terms of the country’s sovereign wealth fund”.
In a statement, the ECB said it planned to start testing the country next year.
The European Central Fund said it was also assessing the feasibility of opening a permanent office in Cyprus, adding that it would be “more effective” if the country “were to join the Eurozone”.
Cyprus has been a financial hub for bitcoin investors since the Cyprus Financial Crisis of 2015.
It has also been a focal point for the development of digital currencies and cryptocurrencies.
Cybercurrency companies have grown significantly since the crisis, with companies like BitPesa, Coinone, and Coinbase.