The Ministry of Finance of Cyprus stressed the need to accelerate capacity building for the crypto industry.

Cyprus is in the process of regulating the crypto industry, with the country’s Treasury Department releasing a country risk assessment on cryptocurrencies.

The official document published on December 13th provides a risk assessment for the Republic of Cyprus on the money laundering risks associated with the operation of virtual assets and the virtual asset providers (VASPs).

The Cypriot Ministry of Finance stressed that there was “limited understanding or direct experience” about the money laundering risks of cryptocurrencies in the country.

However, authorities such as the Cyprus Securities and Exchange Commission (CySEC) and local law enforcement agencies have demonstrated a “sophisticated understanding of the area,” the statement said. The ministry said the authorities should go deeper into the market and receive “in-depth training on these issues” to improve their skills.

The department also recommends that local financial firms adopt “written policies and procedures for compliance” with the virtual currency transfer rule. In the meantime, authorities should start maintaining and sharing data specific to cryptocurrencies and VASPs, the ministry added:

“While activity level is currently considered insignificant, it will form an evidence-based foundation as activity increases and encourages earlier identification of risks or changing risk levels.”

The agency noted that Cyprus should actively work with other jurisdictions with experience in the crypto industry to learn from these relationships and identify best practices.

Such international cooperation can be an important channel for Cyprus to strengthen and accelerate capacity building in the VA / VASP sector.

Related: Israel reportedly passed new AML rules for cryptocurrencies

Cyprus, one of the most insecure countries in the world when it comes to crypto regulation, started adopting crypto-related regulations this year. In September, CySEC revealed new details on crypto regulatory policy and planned to strengthen crypto by incorporating European Union anti-money laundering rules into Cypriot legislation.

The Cypriot crypto ecosystem is fraught with significant uncertainty as several major financial institutions, including the Bank of Cyprus, have allegedly blocked Bitcoin (BTC) -related transactions this year, according to reports on social media.