The nation’s commitment to innovative research and a rapidly growing start-up ecosystem is supported by the state and EU funds that cover expenses for the next 3 years.
For a small island, Cyprus has big ambitions. Having already established itself as a growing fintech center, Cyprus has recognized long ago that it must continually change and challenge itself to remain relevant. The hefty investment made in technology and innovations is positioning Cyprus in the global competitiveness for investors hub. Εxperts in the field ιnsist that the island is a preferred destination for international tech companies and venture capitalists.
Also, in addition, the nation’s commitment to innovative research and a rapidly growing start-up ecosystem is supported by the state and EU funds that cover expenses for the next 3 years. The funding goal aims to bring entrepreneurs, researchers, and academia altogether. In addition, a large sum is invested wisely in digitalizing the government online services and cyber-security. At the same time, many Fintech companies, as well as global players looking for a practical and advanced business hub, have already seen the changes taking place in Cyprus as a huge opportunity.The dynamic fintech movement in Cyprus comprises nearly 250 fintech including start-ups, offering services ranging from real-time investment portfolio securitization and advanced performance analytics to automated order processing.
Cyprus strong foundation for new and existing businesses.
Cyprus has already built strong foundations especially in the coastal city of Limassol, where more than 8000 ICT professionals serve the fintech industry. Also, some world’s leading names in RegTech, IoT, and cybersecurity are operating the country, some large players that benefit from Cyprus start-up ecosystem are AmDocs, eToro, Point Nine which is an industry leader in outsourced operations was acquired by one of the biggest banks in the world, Mitsubishi UFJ Financial Group.Gaming platforms and tech space have also a bright future on the island, some big names include Nexters Global which since they move to Cyprus increased the value of their company to $1.9 billion and the giant Russian video game developer Wargaming. The company headquarters are located in the capital city of the island since 2011. The few companies mentioned above are just a small reflection of the strong foundation that Cyprus possesses.
For any entrepreneurs looking for a European base to begin operations, Cyprus takes some beating. Strategically located at the crossroads of Europe, the Middle East, and Africa, Cyprus is an internationally recognized financial center, with a sound banking sector and a well-established common law system. Both the banking sector and the fully comprehensive FX industry in Cyprus have opened to technological development and regulators and competent authorities take a positive pro-business approach to facilitating fintech activity – all of which offers optimal conditions for new and existing players.
To encourage the wide transformation of financial services, the Cyprus Exchange and Securities Commission (CySEC) has undertaken a sandbox-like initiative to foster innovation. Launched in 2018, the Innovation Hub serves as the formal point of contact between CySEC and domestic and international entities involved in the financial and regulatory innovation technology space and in digital finance. This allows for the seamless transfer of information on how existing regulation applies to new products or business models, whilst also helping identify what regulatory frameworks might need to be established to meet evolving needs – all without stifling innovation.
Unsurprisingly, the Innovation Hub has attracted full-spectrum interest from both fintech and reg-tech companies from Cyprus and abroad, and it is working hard to become a European leader in ‘disruptive technologies. The business models represented in the Innovation Hub include regulatory and AML compliance tools based on big data analytics and data reporting, the use of Distributed Ledger Technology (DLT), AI tools, and a venture capital fund investing in blockchain start-ups.
Benefits to the business sector in Cyprus
The benefits to the business sector in Cyprus from this activity are obvious. The CySEC mark-up the event as an exciting step for the nation’s growth in innovative companies. Also, the organization is aiming at providing investors with in-depth detail analyzing the benefits and opportunities a company hold, and protect them from risky investing on the island.
A recent evaluation made by legal500.com guide concluded after 3 years of consecutive research that the Cypriot fintech growth is positive and encourages further development.The continuous efforts to upgrade the legislative and regulatory regime in Cyprus, and the adoption of new technologies to ensure investors’ protection and service quality, won the island a spot on the most recognized economical platforms such as Bloomberg, Clearstream, Morningstar and Refinitiv.
Other thriving fintech companies include crypto-trading platforms and crypto-exchanges, which have accelerated their activity in Cyprus, and companies offering alternative payment solutions. Cyprus has also been a trailblazer in the blockchain. The University of Nicosia is widely known for becoming the first university in the world to offer a Masters’s in Digital Currency and was also the first to allow fees to be paid by Bitcoin. Having adopted a national blockchain strategy in 2019, Cyprus is now credited for having a fast-growing blockchain ecosystem. According to a paper by the EU Blockchain Observatory and Forum earlier this month, the sector is supported by Cyprus’s “well-developed startup scene and high levels of regulatory maturity”. Between them, the island’s 27 blockchain startups have raised a total of EUR 142 million in funding, making Cyprus one of Europe’s most successful countries in attracting investment capital in the blockchain.
Investment in fintech is boosted by the low corporate tax of 12.5% and a developed network of double tax treaties. Cyprus also offers an 80% tax exemption, on qualifying profits arising out of the exploitation of R&D intellectual property qualifying assets (Cyprus IP Regime). The effective tax rate for corporate income, taking advantage of this incentive, can be as low as 2.5%. As a member of the EU, EEA citizens can also freely work in Cyprus, without permission.
Addressing global challenges
The shortage of talent in the ICT sector is a common challenge for every geography, particularly in cybersecurity, data sciences, and artificial intelligence. However, it is widely acknowledged that the talent base in Cyprus, particularly within the FX industry, is comprehensive. In a recent interview, eToro’s Chief Operations Officer, Avi Sela described the “substantial IT community” and “fantastic talent pool” on the island as the main attractions for settling in Cyprus. Cyprus has the capacity to become one of the great tech hubs in the world. Mentioned by government officials, amongst the strategic priorities is to develop Cyprus as an ideal EU location for international investors and high-tech companies to base their operations and scale up on the island. Every effort is focused on empowering a new generation of tech entrepreneurs and nurture a culture of innovation and entrepreneurship.