Succesful Business #43 January-March 2022 by Вестник Кипра

SUCCESSFUL №43 January-March 2022 www.cyprusrussianbusiness.com

BUSINESS Cyprus Business analytics Magazine

2022 ECONOMIC OUTLOOKS AND FORECASTS NEW REGULATORY FRAMEWORK FOR CASP DEADLINE TO REGISTER BENEFICIAL OWNERSHIP

GEORGE THEOCHARIDES: AS REGULATORS, WE NEED TO BE PROACTIVE

CONTINENTAL GT

a compelling statement of performance, luxury and automotive beauty.

Model shown: Continental GT V8 in Beluga paint with Blackline Specification WLTP drive cycle: fuel consumption, mpg (l/100 km) – Combined 20-20.6 (13.7-14.1). Combined CO₂ – 311-320 g/km.

F.L.C.P. AUTOMOBILE LIMITED 1 loanni & Aggelikis Kordari Ser., Ayios Achanasios. CY4102 - Limassol (+357) 25 020 010 • info@bencleycy.com

№43 January–March 2022

contents Cover:

Dr George Theocharides, Chairman, Cyprus Securities and Exchange Commission

Photo: Marios Hapsis

TECHNOLOGY AND INNOVATION

NEW REGULATORY FRAMEWORK FOR CRYPTO ASSET SERVICES PROVIDERS

MOVING FORWARD: NFTS, META, WEB3, AND CYPRUS DTL STRATEGY

CYPRUS: PERFECT BASE FOR DIGITAL NOMADS

The Cyprus Securities and Exchange Commission (CySEC) has become the anti-money laundering and counter-terrorist financing (AML/CFT) supervisor for crypto-asset operations undertaken in or from Cyprus. New CASP businesses must register with CySEC before commencing their operations in or from Cyprus.

The attributes of blockchain technology, wrapped nicely with token interface standards such as that of NFTs, are revolutionising the ownership of real and virtual word assets. Through dApps, blockchain technology has pushed to revolutionise the financial products and financial concepts as we know them, where Web3 ecosystem is creating the future of finance in the DeFi sector.

Living a nomadic lifestyle became a trend in recent years. Paradoxically, the global pandemic helped promote the concept. Last two years proved that many of us could work remotely with the help of technology.

CONTENTS Successful Business Magazine

CYPRUS BUSINESS NEWS

Action Plan to 10 New Attract Investments Tax Reform 14 First in 20 Years Digitisation to Streamline Banking Illegal Migration: Cyprus First in EU Access 16 Online to Public Services State Budget 2022 FINANCE AND INVESTMENTS

ENERGY Natural Gas by summer 2023 Battle on electricity prices ExxonMobil and Qatar Petroleum given Block 5

TOURISM Efforts for more tourists More than twofold growth in revenues Positive changes in passenger traffic

CROSS-BORDER DISTRIBUTION OF INVESTMENT FUNDS IN EUROPE

22 28

The European Union has taken steps to facilitate the crossborder distribution of funds (both undertakings for collective investments ‘UCITS’ and alternative investment funds ‘AIFs’) by introducing the Cross-Border Distribution of Funds package of measures (the ‘CBDF legislation’).

DEADLINE TO REGISTER BENEFICIAL OWNERSHIP The submission of data concerning beneficial ownership is due by 12 March 2022 in accordance with the relevant announcement of the Department of Registrar of Companies and Intellectual Property.

24 LEON MFO INVESTMENTS: CAPITALISING ON OPPORTUNITIES IN CYPRUS

The fund industry in Cyprus has been steadily growing in recent years. However, there are still gaps in the local market in terms of the SIGNIFICANT GROWTH investement strategies offered to IN INVESTMENT FUND SECTOR investors. The interview is about the The investment fund sector enjoyed significant growth dur- situation in the market and plans to ing 2021, with the total amount of Assets under Management enhance the investment offering (AuM) increasing by 48.7% despite the adverse effects of to well-informed and professional the pandemic. investors.

SUCCESSFUL BUSINESS | JANUARY-MARCH 2022

CONTENTS www.cyprusrussianbusiness.com

PRIVATE BUSINESS

CYPRUS AMONG BEST PLACES FOR PRIVATE BUSINESSES

PWC: ROLE OF FAMILY OFFICES TODAY

PwC’s first ever EMEA Private Business Heatmap ranks the attractiveness of 34 EMEA countries across categories including macroeconomics, private business landscape, tax and regulatory environment, Environmental, Social, and Governance metrics, public health, education, skills and talent, and technology infrastructure. INTERVIEW

ANNA HOMENKO: WHY ARE FAMILY OFFICES OPENING IN CYPRUS?

Recently, multi-family offices have started to appear in Cyprus more often. Does Cyprus meet the requirements of the modern world in this area, and is it competitive in comparison with other countries?

NEWTECH AND DIGITAL ASSETS

BLOCKCHAIN AND CRYPTO IN SIMPLE WORDS

DELOITTE’S 2021 GLOBAL BLOCKCHAIN SURVEY RESULTS

The summary includes information that is essential to know about blockchain. How the technology works. Cryptocurrencies. Pros and cons of blockchain.

Today digital assets are affecting the entire financial market. Will they create opportunities for economic growth? How will financial services industry models change? Is the regulatory structure over financial services prepared for this change?

TRENDS AND FORECASTS

ECONOMIC OUTLOOKS AND FORECASTS 2022 Credit Suisse. Moody's. Goldman Sachs. Morgan Stanley. Bloomberg. Fitch. S&P. J.P. Morgan. Saxo Bank

70 BUILDING BRIDGES BETWEEN CYPRUS AND RUSSIA Successful Business Leaders’ Club and Vestnik Kipra have prepared a series of visits to Russia as well as Cyprus-Russian sessions at two local conferences in Cyprus. These activities will re-establish active and fruitful business communication between both countries.

JANUARY-MARCH 2022 | SUCCESSFUL BUSINESS

OUR TEAM

Successful Business Magazine Issue 43, January - March 2022 Editorial Board: Natalia Kardash, Andrey Korneev, Igor Nossonov, Andrey Pavelko. Editor: Maria Vetrova, Andrianne Philippou. Contributors: Julia Avanessova, Ekaterina Kardash, Lusine Mirzoyan, Igor Voronin Circulation: 2,000 copies. Distribution: free at business forums, conferences, seminars. 1,200 selected recipients mailing list. Subscriptions: four issues – 40 euro (delivery by courier service) or 20 euro (by mail). Website: www.cyprusrussianbusiness.com A note to readers: the views expressed are the authors' and not necessarily those of SUCCESSFUL BUSINESS Magazine. Authors may have consulting or other business relationships with the companies they discuss. Copyright: no part of this publication may be reproduced or transmitted in any form or by any means without prior permission of VESTNIK KIPRA or N. G. K. Cyprus Advertiser Ltd. Photos: Vestnik Kipra, Successful Business, PIO, CNA, freepik.com, depositphotos.com

Vestnik Kipra Publishing House (N. G. K. Cyprus Advertiser Ltd) Director and Editor-in-Chief: Natalia Kardash (nk@vkcyprus.com) Head of Administration Dept.: Galina Panagassova (ads@vkcyprus.com) www.vkcyprus.com Tel.: (+357) 25 590530 Postal Address: P.O.Box 58236, 3732, Limassol, Cyprus

Tax Facts & Figures 2022 - Cyprus The tax system in Cyprus January 2022

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EDITORIAL

Natalia Kardash Publisher, Editor-in-Chief

Successful Business is a Russian-language business magazine that celebrated its 10th anniversary in 2021. A year ago, we had an experiment of publishing one of the issues in English. The idea was simple: there are many businesspeople in our community who do not speak Russian. So, why don’t we have a publication in English, at least once a year, addressed mainly to expats, those foreigners who live and work in Cyprus. Our first issue in English published last January was received positively. That is why we decided to start 2022 with another publication in English that will be distributed among hundreds of international companies in Cyprus. Since it is the beginning of the year, we included summaries of economic outlooks and forecasts published by experts from various world-renowned organisations. At the same time, looking back at 2021, we summarised the most important Cyprus news for the last three months of the year. This issue is dedicated to emerging industries such as IT, fintech, hi-tech, and innovations that Cyprus supports and promotes. We spoke to George Theocharides, Chairman of the Cyprus Securities and Exchange Commission, about eliminating regulatory gaps and ensuring the highest level of investor protection supervised by the Commission. Knowing how many people are interested in cryptoassets, we also discussed the current crypto landscape in the EU and Cyprus as well as some recent and forthcoming regulatory developments. In this issue, you will find articles on NFTs, Meta, Web3, Cyprus DTL Strategy, and Cyprus Digital Nomad strategy. In 2022, the Successful Business Magazine is co-organising ten private business visits to Russia. We invite our readers to learn more about the destinations and the programmes of these events and consider joining us on any trip that fits their business interests. Overall, the Successful Business Magazine editors believe that in 2022, the economic impact of the virus will be smaller than in the previous two years and the global economy will rebound from the pandemic. Cyprus is taking the right steps towards recovery attracting healthy and innovative businesses, creating conditions for IT-related specialist relocation, and having a new plan to attract investments.

www.vkcyprusinvest.com

ip@vkcyprus.com Event Director Irina Patsalidou

+357 97 745594

Conference Seminars Presentations Business meetings Informal communication

10-11 May 2022 Four Seasons Hotel, Limassol

CYPRUS NEWS Successful Business Magazine

NEW ACTION PLAN TO ATTRACT INVESTMENTS

<<<

President Nicos Anastasiades presented the government’s Action Plan, which has to come into force in January 2022, assuming that the two relevant laws are approved by parliament. The plan will offer a number of incentives for third-country nationals, aiming to attract tech companies to Cyprus. The new measures cover the revision, broadening, and simplification of the procedures for the employment of thirdcountry highly skilled nationals and support staff and promotes the right to family reunification. The process for granting LongTerm Resident Status will also be speeded up and simplified. The list of incentives also includes the introduction of a Digital Nomad Visa for third-country nationals. There are also new tax incentives for existing or new non-domiciled employees, as well as for investments in innovation or R&D.

‘BAD BANK’ FOR NPLS The European Commission is expected to grant state-owned asset management company Kedipes the necessary approval to operate as a bad bank during the second half of 2022. Kedipes began operation in September 2018 to manage the non-performing assets of the former state-owned Cooperative Bank, whose deposits and performing loans were sold to Hellenic Bank. In the future, Kedipes might become a national asset management company.

CRYPTOASSET SERVICE PROVIDERS IN CYPRUS

CYPRUS STATE BUDGET IN 2021 According to figures released by the Statistical Service, during the first 10 months of 2021 the general government deficit dropped to 1.1% of GDP – compared to 3.3% in the corresponding period last year. Total revenues for January to October came to €7.778 billion (€6.674 billion in Jan-Oct 2020). Total taxes on production and imports rose to €2.802 billion from €2.418 billion. Tax revenue on income and wealth came to €1.741 billion, compared to €1.543 billion. Social insurance contributions tallied at €2.172 billion, up from €1.905 billion during the same period last year. In turn, total expenditures came to €8.04 billion, compared to €7.394 billion. The increase in expenditures was due to ongoing coronavirus-related relief, higher welfare spending, and a higher government payroll – €101 million more compared to last year.

On September 13, the Cyprus Securities and Exchange Commission (CySEC) issued a policy statement on the registration and operations of cryptoasset services providers (CASPs). The definition of obliged entities has been updated, and the following entities should become approved and registered with CySEC: • CASPs which provide or exercise services or activities on a professional basis from Cyprus, regardless of their registration in another EEA member state • CASPs which provide or exercise services or activities on a professional basis in Cyprus, except persons who provide or exercise services or activities regarding cryptoassets and have been registered in another EEA member state • CASPs registered in a third country which provide or exercise services or activities on a professional basis in or from Cyprus.

Sources: Cyprus Mail, CNA, CySEC, CyStat.

€7.78B Jan-Oct 2021

total government revenue

SUCCESSFUL BUSINESS | JANUARY-MARCH 2022

€8.04B

total government expenditures Jan-Oct 2021

CYPRUS NEWS www.cyprusrussianbusiness.com

<<< NATURAL GAS BY SUMMER 2023 Cyprus and a consortium led by China Petroleum Pipeline Engineering Co Ltd signed a contract for the construction of the multimillion infrastructure for the import of liquefied natural gas (LNG) at the Vassiliko port for electricity generation, a project described as the biggest ever in the field of energy in Cyprus. The project with an estimated worth of €290 million has secured a €101-million grant from the EU under the Connecting Europe Facility (CEF) financial instrument. The rest of the financing will come from Cyprus Electricity Authority's participation in the share capital of the Natural Gas Infrastructure Company (ETIFA), with €43 million, and through financing by the European Investment Bank and the European Bank for Reconstruction and Development, with €150 million and €80 million, respectively. Deputy Managing Director of China Petroleum Pipeline Engineering Duan Bingquan pledged his determination to bring natural gas to Cyprus which is scheduled to be delivered at the end of June 2023.

BATTLE ON ELECTRICITY PRICES Parliament approved a proposal to cut VAT on electricity bills from 19% to 9% across the board for an indefinite period. The bill must be signed by the president to come into force. However, the President vetoed it arguing the bill violated EU legislation, the separation of powers, and would also have a huge impact on the state’s finances. The Parliament will have to decide on the referral by January 5, 2022 at the latest and after the House Finance Committee convenes first. The government opposed the proposal from the beginning as one that would affect state revenues and expenditures on a permanent basis and without being targeted.

EXXONMOBIL AND QATAR PETROLEUM GIVEN BLOCK 5 The Council of Ministers awarded natural gas exploration rights for an offshore Block 5 to a consortium of ExxonMobil (60%) and Qatar Petroleum (40%). The two will start field work for seismic data acquisition in Block 5 next year. This is the tenth offshore block to be licensed by the Republic of Cyprus. The consortium has had the rights for the adjoining Block 10 (2,572 sq. km) since 2017 and made a 142 billion to 227 billion cubic metres gas discovery at Glaucus – 1 well. As expected, in December 2021 the consortium resumed drilling activities postponed due to the pandemic having become the first of Cyprus’ licensees to do so.

 The Minister of Energy, Commerce and Industry Natasa Pilides assumed the presidency of the East Mediterranean Gas Forum. The Forum was set up to help set common strategies among member countries, create a competitive regional gas market, help safeguard supply and demand, as well as to help coordinate resource development efforts.  In 2022, the government plans to go ahead with taxation reform after 20 years. The reforms would see, among others, the introduction of a carbon tax with the gradual rise of taxes on fossil fuels, as well as the introduction of environmental taxes that will serve to achieve environmental objectives.  Inflation in Cyprus rose to 4.3% in November. The largest changes when compared to the index of November 2020 were recorded in Electricity (35.7%) and Petroleum products (30%). In comparison to the index of the previous month, the largest change was monitored in Electricity (7.5%).  Sales of petroleum products in Cyprus rose by an annual 25.2% in October amounting to 132,329 tonnes. In the period of January – October 2021, the total sales of petroleum products increased by 3.4% compared to the corresponding period of the previous year.

€290M COST OF LNG-IMPORT INFRASTRUCTURE AT VASSILIKO

JANUARY-MARCH 2022 | SUCCESSFUL BUSINESS

CYPRUS NEWS Successful Business Magazine

 The total sales of motor vehicles decreased by 9.4% year-on-year between January and November 2021, according to a report by the Cyprus Statistical Service (CyStat). The total registrations of new vehicles increased by 9.6%, while the corresponding registrations of used vehicles decreased by 21.3% year-on-year. Meanwhile, total registrations in November fell by 38.1% compared to the corresponding period of the previous year. Sales of new vehicles decreased by 19%, while sales of used vehicles fell by 49.5%.  Cyprus was re-elected to the Council of the International Maritime Organization (IMO) during the 32nd IMO General Assembly held in London. Cyprus was a candidate along with 27 other IMO member states that were running in the same category. Out of a total of 160 countries that voted, Cyprus received support from 133 countries, securing the 3rd place. On a similar note, Cypriot shipowner Philippos Filis was elected head of the European Community Shipowners’ Associations (ECSA) during the General Assembly that was held in December in Brussels. His tenure begins in January 2022 for a period of two years  The Ministry of Transport called for tenders for the provision of 32 electric vans with a budget of €1,120,000, to be used by state services as part of its efforts to promote clean energy and lower carbon emissions. The final goal is to replace 31.9% of public vehicles with zero-emission ones by the end of 2025.  The Turnover Value Index of Transport and Storage for the third quarter of 2021 reached 101.6 units (base year 2015=100), recording an increase of 27.6% compared to the corresponding quarter of 2020, according to CyStat. The biggest increases were observed in air transport by 95.2% and in water transport by 91.1%. During the period January-September 2021, the Turnover Value Index of Transport and Storage recorded an annual increase of 3.3%.

Sources: Cyprus Mail, CNA, CyStat, StockWatch.

NEW START FOR CYPRUS-GREECE FERRY The Deputy Ministry of Shipping launched an invitation for bids for a sea connection between Cyprus and Greece with improved terms for potential bidders. The aim is to re-establish a link that was terminated over 20 years ago. Following the failure to attract any bids with the first competition that closed on January 29, 2021, the government has raised the subsidy from €5 million to €5.5 million and cut the number of return trips to 22 instead of 31. The tender can be expanded for an additional three years, and the bidders can submit more than one ship. The vessel(s) will have a minimum passenger capacity of 100 persons and cabins that can accommodate 60 passengers. The deadline for tender submissions is 12:00 on the 28th of January 2022. In the meantime, the Israeli Minister of Transport Merav Michaeli suggested that extending the Cyprus-Greece maritime connection to Israel would benefit all sides and increase Cyprus’ chances of finally reinstating the ferry link.

FROM CARS TO BICYCLES

<<<

Transport Minister Yiannis Karousos announced incentives for the purchase of electric vehicles, including taxis and buses, and transportation means with lower emissions in combination with a car scrappage scheme. The first scheme, with a €4 million budget, concerns the scrappage of cars older than 12 years and their replacement with new ones with lower emissions, or with electric bicycles, or in exchange for bus tickets. In case of a new electric bicycle, the subsidy is at €1,000 (533 beneficiaries), while for the withdrawal of an old vehicle in exchange for free tickets on regular bus lines the subsidy will amount to €750-worth of coupons (100 beneficiaries). For the scrappage of an old car and its replacement with a new one that emits less than 50g/km of carbon dioxide, the subsidy is at €7,500. In total, 360 subsidies will be given. For those wishing to scrap an old car and purchase a taxi that emits less than 50g/km CO2 the subsidy is €12,000 (33 subsidies). For the scrappage of an old car and purchase of a new one for disabled people that emits less than 50g/km CO2 the subsidy is €10,000 (20). The same applies for purchasing a car for large families (20). The car cost must not exceed €80,000 including VAT, while for bicycles, the ceiling was set at €6,000.

€5.5M

SUCCESSFUL BUSINESS | JANUARY-MARCH 2022

annual subsidy to Greece-Cyprus ferry operator

CYPRUS NEWS www.cyprusrussianbusiness.com

EFFORTS FOR MORE TOURISTS The budget of the Deputy Ministry of Tourism was increased from €45.7 million in 2021 to €53.7 million in 2022 while Deputy Minister Savvas Perdios announced six priorities for his office. €5 million goes to developing digital marketing and advertising Cyprus abroad over the next 12 months. The second pillar is to strengthen tourism through upgrades to infrastructure and special forms of tourism, such as sports tourism or medical tourism.

The Deputy Ministry will also help promote mountainous and rural areas through a series of new initiatives like the Heartland of Legends route. The fourth goal is to help local tourism grow through different support schemes. The fifth is collaborating with travel agencies and airlines on targeted advertising to help enter markets with year-round flight schedules. Lastly, €3 million will be taken from the government’s Recovery and Resilience Plan for four different projects. Perdios noted that the largest percentage of the budget, 40%, is for the marketing, 25% is staff salaries and another 25% is to upgrade the tourism product. The long-term goal is for Cyprus to increase its tourist visitors from four to five million by 2030, and for winter visits to increase from 25% to 40% so that mountainous and rural areas get to benefit from an extended tourist period.

POSITIVE CHANGES IN PASSENGER TRAFFIC

ARRIVALS OF TOURISTS AND REVENUE 4.500 4.000 3.500 3.000 2.500 2.000 1.500 1.000 500 0

2000 2005 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Tourist arrivals 000's

Revenue from tourism (€m)

MORE THAN TWOFOLD GROWTH IN REVENUES Revenue from tourism for the period of January-September 2021 jumped by an annual 250% exceeding €1 billion, but still remained below the pre-Covid respective period. According to data release by the Statistical Service of Cyprus (CyStat) revenue from tourism for the period reached €1,045.2 million compared to €298.9 million in the corresponding period of 2020, recording an increase of 249.7%. Compared with January-September 2019, tourist revenue was down by 53.2%. In September 2021 tourist revenue amounted to €268.2 million marking an increase of 323.7% compared with September 2020. Compared with September 2019 (€377.2 mln), there was a decrease of 28.9%.

Minister of Transport Yiannis Karousos said that 62 airlines used the island’s two international airports in 2021, while 157 routes were operated. In the 11 months to November, tourists visiting Cyprus jumped 195.9%, recording an increase of 1.21 million arrivals. According to data announced by the Cyprus Statistical Service, the number of tourists totalled to 1,840,003 for the 11 months from 621,927 last year, when Covid-19 travel restrictions were worse. However, compared to JanuaryNovember 2019, there was a decrease of 52.4% when a record 3,866,447 visitors came pre-coronavirus. Karousos said that in 2020 Larnaca and Paphos airports jointly handled a total of 2,312,697 passengers – compared to 11,273,748 passengers in 2019. The government has sought to tackle this discrepancy in traffic numbers by adopting various measures, such as a loan of €22.2 million granted to Hermes Airports Ltd, the operator of the airports, as a measure to remedy the pandemic-caused effects on the economy.

JANUARY-MARCH 2022 | SUCCESSFUL BUSINESS

CYPRUS NEWS Successful Business Magazine

FIRST TAX REFORM IN 20 YEARS  The real GDP growth rate in Q3 2021 is estimated at 5.5% over the corresponding quarter of 2020 and is mainly attributed to the following sectors: "Hotels and Restaurants", "Manufacturing", "Transport, Storage and Communication".  Cyprus ranked 21st among 27 EU Member States in the 2021 edition of the Digital Economy and Society Index (DESI).  Bank of Cyprus, the island’s largest lender, announced net profits amounting to €20 million in the first nine months of 2021, compared with loss of €122 million in the respective period last year. Hellenic Bank announced net profits amounting to €21 million in the first nine months of 2021, compared with net profit of €40 million in the respective period of last year.  In October 2021, deposits in the Cyprus banking system rose for a fourth consecutive month reaching a new three-year high, while loans continue deleveraging. Total deposits recorded a net increase of €278 million compared with a net increase of €8 million in September 2021. The outstanding amount of deposits reached €50.5 billion. The outstanding amount of total loans declined to €29.6 billion. Total loans recorded a net decrease of €15.7 million in October compared with a net increase of €27.1 million in September 2021.  The UN Secretary General’s new Special Representative and Head of the United Nations Peacekeeping Force in Cyprus (UNFICYP), Colin Stewart, arrived on the island to assume his duties in December, as Elizabeth Spehar’s term of office as head of the UN mission in Cyprus ended on November 30.  In its annual reassessment of the designation of credit institutions that meet the definition of Other Systemically Important Institutions (O-SII), the Central Bank of Cyprus designated six credit institutions as O-SII. Those are Bank of Cyprus, Hellenic Bank, Eurobank Cyprus, RCB Bank, AstroBank, and Alpha Bank Cyprus.  General Government deficit decreased by €458.4 million in the first ten months of 2021, reaching €261.9 million compared to a deficit of €720.3 million in the same period of 2020. The reduction is attributed to the increased state revenues from taxes and social contributions. Sources: CBC, Cyprus Mail, CNA, CyStat, StockWatch.

<<<

The government plans to go ahead with taxation reform after 20 years, including raising the corporation rate and introducing carbon tax and fossil fuels taxes to achieve the country’s environmental objectives. According to Finance Minister Constantinos Petrides, the government is focusing on the issues like the increase of corporation tax from 12.5% to 15%, reduction in the contribution on interest rates, and reduction or abolition of the €350 company fee. The reforms would also see the introduction of a carbon tax with the gradual rise of taxes on fossil fuels, as well as the introduction of environmental taxes. There will also be a readjustment of VAT rates based on a recent EU decision about products and services relating to public health and digital transition. “In our view, raising the corporation tax in Cyprus from 12.5% to 15% will not substantively affect fo-reign investment in Cyprus,” Petrides said. “As an investment destination, Cyprus possesses such comparative advantages, which surpass this small rise in the corporation tax rate.”

DIGITISATION TO STREAMLINE BANKING The Central Bank of Cyprus is setting up a digital client on-boarding and reviewing programme aiming to streamline banking operations. This follows the complaints by the Cyprus business community over time-consuming procedures in setting up bank accounts or updating client data. The preparatory work by the CBC technocrats and contacts with the commercial banks is well underway, and a tender will be launched in the coming period. The upcoming digital solution aims to assist businesses, self-employed persons, and households by reducing the time consumed in banking operations and by significantly upgrading the speed and quality of the service, while improving the banks’ efficiency and at the same time ensuring compliance with European regulations. Participating in the project are Bank of Cyprus, Hellenic Bank, Alpha Bank Cyprus, AstroBank, the CDB, Eurobank Cyprus, and RCB; other licenced institutions are also expected to join the initiative.

21st Cyprus’ rank in the 2021 DESI Index outstanding deposits €50.6b in Cyprus banks

SUCCESSFUL BUSINESS | JANUARY-MARCH 2022

CYPRUS NEWS www.cyprusrussianbusiness.com

<<<

UNEMPLOYMENT LOWEST IN 20 YEARS In the third quarter 2021, unemployment has dropped to the lowest level in the last 20 years. The number of employed persons was 440,959 and the employment rate was 60.3% (males 66.3%, females 54.8%) in comparison to 414,920 persons (57.7%) in the corresponding quarter of 2020. The number of unemployed persons amounted to 31,355 and the unemployment rate to 6.6% of the labour force (males 6.1%, females 7.2%) in comparison to 37,234 persons (8.2%) in the corresponding quarter of 2020. For the age group 20-64, the employment rate was 77.2%. The rate for males was 83.2% and for females 71.5%. In the corresponding quarter of 2020, the rate was

66.3% OF MALES 54.8% OF FEMALES

PART-TIME

48,482

77.2%

71.5%

83.2%

females

males

MALES 9.4%, FEMALES 12.7%

UNEMPLOYED 31,355 MALES 6.1%, FEMALES 7.2%

EMPLOYMENT SECTORS

AGRICULTURE 2.8% MANUFACTURING 17.3%

SERVICES 79.9%

ILLEGAL MIGRATION: CYPRUS FIRST IN EU A total of 10,868 asylum applications had been submitted in Cyprus from the beginning of the year until the first week of November. In addition, of the 48,357 applications for international protection made since 2015, some 23,474 have been filed by people from countries deemed ‘safe’. 85% of the 10,868 asylum applications filed since the beginning of 2021 were submitted by people who crossed illegally into Cyprus through the Green Line. The figures were released by Interior Minister Nicos Nouris during the EU’s sixth annual monitoring committee of internal affairs. “For the fifth consecutive year, Cyprus is the country receiving the highest number of applications for asylum and international protection in proportion to the population, an amount corresponding to 4.4% of the country’s population,” he said. “The situation has now reached a point that beyond the capacity of the government to control or manage.” “On average, we have received over 1,000 asylum applications every month this year, with the exception of October, when the number rose to 2,000, and November, when we recorded over 1,600. Moreover, the number of applications throughout the year surpassed last year’s figures by 70%.” Sources: Eurostat, Cyprus Mail, CyStat

asylum applications filed in Cyprus (Jan-Nov 2021)

440,959

EMPLOYMENT RATE 20-64 YO

10,868

EMPLOYED

74.5% (males 81.4%, females 68.0%). For the age group 55-64 the employment rate was 65.5% in comparison to 61.9% in the corresponding quarter of 2020. According to the distribution of employment by sector, the biggest percentage of employed persons was in Services (79.9%), followed by Manufacturing (17.3%) and Agriculture (2.8%). For the 3rd quarter of 2020, the corresponding percentages were: Services 77.3%, Manufacturing 19.8% and Agriculture 2.9%. The share of part-time employment to total employment was 11.0% or 48,482 persons (males 9.4%, females 12.7%). The corresponding rate for the 3rd quarter of 2020 was 10.2% (males 7.9%, females 13.0%).

JANUARY-MARCH 2022 | SUCCESSFUL BUSINESS

CYPRUS NEWS Successful Business Magazine

ONLINE ACCESS TO PUBLIC SERVICES Cyprus Government aspires to give its citizens the potential to have online access to public digital services and government services as of 2022 through a Portal (gov.cy) the construction of which is being promoted by the Deputy Ministry of Research, Innovation, and Digital Policy. Presenting the results of 2021, Deputy Minister of Research, Innovation and Digital Policy, Kyriakos Kokkinos, said that "the aim is to have in 2022 the public sector on one screen and to offer an easy and quick search and navigation system. I am absolutely convinced that we will make it". Kokkinos noted that a Portal is being set up in cooperation with the UK Government Digital Services, adding that an inter-state agreement for the provision of advisory services amounting to €1.5 million was reached to this end and that gov.cy will operate in the same way as gov.uk in the UK. The Deputy Minister said that a total of 214 services that will be included in the Portal have been identified so far, adding that the Digital Services Factory, which is the team responsible for the Portal, is currently being trained by UK experts. Kokkinos also said that the digital ID and the digital signature are being promoted and the citizens will be able to have in a wallet on their mobile phones personal certificates as their ID, passport, and birth certificate, in digital form. Referring to new online services to be introduced in 2022 he noted that these concern the Labour Ministry (Social Insurance Services, applications for allowances and pensions), the Town Planning and Housing Department, the Tax Department, and the Commerce Ministry.

CYPRUS AND JORDAN STRENGTHEN RELATIONS Βilateral relations, regional developments, climate change, efforts to combat Covid-19, and the Cyprus issue were on the agenda of a meeting President Nicos Anastasiades had with the King of Jordan Abdullah II, who paid an official visit to Cyprus on 17 December 2021. During this visit in Nicosia, the Republic of Cyprus and the Hashemite Kingdom of Jordan signed the Agreement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income.

INVESTMENTS IN AGRICULTURE STATE BUDGET 2022 Cyprus House of Representatives approved the state budget for 2022 that provides for €9.7 billion in revenues and €9.9 billion in expenditure. Finance Minister Constantinos Petrides said that the 2022 state budget is one of sustainable growth, green transition and social state, highlighting the fact that this is the first budget approved by the House that is really linked to reforms.

Cyprus plans to spend €461.9 million on the agricultural sector over the five-year period of 2023-2027. Cyprus’ strategic plan is in line with the EU’s new development model as expressed in the Green Deal, From Farm to Fork, Biodiversity 2030, and the Circular Economy Action Plan. Of the €461.9 million, some €83.6 million will come from national sources. The scheme provides for €238.2 million in direct payments, €22 million for joint-marketing organisations, and €201 million for agricultural development. The nine objectives are: supporting viable agricultural income and resilience so as to bolster food security; increasing competitiveness, focusing especially on research, technology, and digitilisation; improving farmers’ position in the food chain; mitigating climate change; promoting viable growth and effective management of natural resources such as water, soil, and air; contributing to biodiversity and protecting natural habitats; attracting new farmers and facilitating their business growth; promoting employment, social integration, and local development in farming areas and finally improving the response of agriculture to society’s demands concerning food and health including through more bio-farming and using less antibiotics.

SUCCESSFUL BUSINESS | JANUARY-MARCH 2022

FINANCE AND INVESTMENTS www.cyprusrussianbusiness.com

CROSS-BORDER DISTRIBUTION OF INVESTMENT FUNDS IN EUROPE The European Union has taken steps to facilitate the cross-border distribution of funds (both undertakings for collective investments ‘UCITS’ and alternative investment funds ‘AIFs’) by introducing the Cross-Border Distribution of Funds package of measures (the ‘CBDF legislation’). The CBDF legislation includes a Directive (EU) 2019/1160 amending both the UCITS Directive and AIFMD and a directly effective Regulation 2019/1156 supplemented by ESMA guidelines on marketing communications for UCITS and AIFs published on 27 May 2021. The Directive was implemented in Cyprus with the publication on 18 October 2021 in the official gazette of amending legislations 135(I)/2021 and 134(I)/2021 to the Alternative Investment Fund Managers Law as well the Open-Ended Undertakings for Collective Investment (UCI) Law respectively. The new rules increase the harmonisation on the marketing of AIFs and UCITS, reduce regulatory barriers, improve cost efficiencies, and enhance investor protection.

● creation of central databases for the publication of national marketing requirements ● fees and charges ● list of AIFs, UCITS, and their managers.

NEXT STEPS

Fund managers that undertake marketing activities for UCITS or AIFs in the EU, or that engage distributors to market UCITS or AIFs in the EU will need to consider whether the new framework requires them to make any changes to their existing cross-border distribution arrangements and/or marketing materials. Source: KPMG

SUMMARY OF KEY POINTS

The Directive introduces rules regarding: ● ‘pre-marketing’ of AIFs ● local facilities for UCITS and AIFs sold to retail investors ● alignment of procedures and conditions for the de-notification of UCITS and AIF funds in a host Member State ● alignment of certain notifications in respect to marketing an EU AIF or UCITS in a host Member State.

THE REGULATION CONTAINS RULES ON:

● requirements around marketing communications ● verification of marketing communications by regulators

JANUARY-MARCH 2022 | SUCCESSFUL BUSINESS

PRIVATE BUSINESS Successful Business Magazine

CYPRUS AMONG BEST PLACES FOR PRIVATE BUSINESSES Switzerland, Norway, UK, Germany, Sweden, and France lead the rankings as best places for private businesses and entrepreneurship to flourish in PwC’s first ever EMEA Private Business Heatmap. It ranks the attractiveness of 34 EMEA countries across categories including macroeconomics, private business landscape, tax and regulatory environment, Environmental, Social, and Governance metrics, public health, education, skills and talent, and technology infrastructure. Cyprus ranks in the ‘advancing’ category, placing 12th, with an overall score of 54.5, while The Netherlands ranks 11th (54.8) and Luxembourg 10th (54.9). Cyprus achieved a high ranking in the Macroeconomics (5th) and Tax-Regulatory environment (4th) categories. At the same time, however, the Heatmap’s findings highlight a few categories in which Cyprus still has a long way to go. These fields have to do with ESG metrics (31st) and Technology Infrastructure (18th).

Cyprus Overall Score Rank

Rank

SUCCESSFUL BUSINESS | JANUARY JANUARY-MARCH – MARCH2022 2022

54.5

The key findings include: ● Five countries rank as the leading jurisdictions this year. ● A further 12 jurisdictions rank in the ‘advancing’ category with an EPB Heatmap overall score of at least 50 out of 100. ● 12 jurisdictions were identified as ‘developing’ with an EPB Heatmap score of between 40 and 50 out of 100. ● Five jurisdictions were identified as ‘emerging’ with an EPB Heatmap score of less than 40 out of 100. ● All four Nordic countries place within the top 10 jurisdictions based on overall EPB Heatmap rankings: Norway (2nd), Sweden (5th), Denmark (7th), and Finland (8th). Sweden ranks top within the ESG and Public Health categories. Norway co-leads the Education, Skills and Talent category. ● The UK also performs strongly, with a 3rd place ranking overall.

PRIVATE НАЛОГИBUSINESS И ПРАВО www.cyprusrussianbusiness.com ПЯТАЯ ДИРЕКТИВА АМЛ И РОССИЙСКОЕ НАЛОГОВОЕ ПЛАНИРОВАНИЕ НА КИПРЕ

Private Business Heatmap Overall index for ease of doing business 1

Switzerland 76.8

Norway 63.7

UK 61.4

Germany 60.8

Sweden 60.1

France 59.7

Denmark 57.1

Finland 55.9

Spain 55.7

Luxembourg 54.9

Netherlands 54.8

Cyprus 54.5

Estonia 52.4

Ireland 52.3

Austria 51.2

Malta 51.1

Belgium 50.6

Lithuania 49.1

Portugal 48.5

20 Italy 47.5 21

Czech Republic 47.2

22 Slovenia 45.3 23 Hungary 44.5 23 Russia 44.5 25 Slovakia 43.7 26 Bulgaria 43.0 27

Latvia 42.6

28 Romania 41.7 29 Poland 41.6 30 Croatia 38.5 31

Kenya 36.6

32 South Africa 33.6 33 Greece 32.8 34 Nigeria 22.7

Leading jurisdictions Advancing jurisdictions Developing jurisdictions Emerging jurisdictions

JANUARY JANUARY-MARCH – MARCH 2022 | SUCCESSFUL BUSINESS

PRIVATE BUSINESS Successful Business Magazine

ANNA HOMENKO: WHY ARE FAMILY OFFICES OPENING IN CYPRUS? The concept of а ’family office’ is not new. For a long time, all over the world large family capital and the affairs of wealthy families have been managed by professionals. But recently, multi-family offices have started to appear in Cyprus more often. These family offices serve the interests of several families at once. Is this an advantage or a disadvantage? Does Cyprus meet the requirements of the modern world in this area, and is it competitive in comparison with other countries? Successful Business speaks with the founder and CEO of Fiduciana Trust (Cyprus) Limited, Anna Homenko, about why choosing the island to establish a family office is growing in popularity and how this industry is changing.

ANNA HOMENKO Founder and CEO of Fiduciana Trust (Cyprus) Limited, Leisure Life Property Management anna.homenko@fiduciana.net Graduated from the Institute of International Relations at the Taras Shevchenko National University of Kyiv, Faculty of International Law, and Keele University (UK), Faculty of Law and International Politics. Completed a Legal Practice Course (LPC) in Chester (UK).

The concept of a family office exists all over the world. Yet, until recently, it was not very popular in Cyprus. What changed? How is it developing on the island? Previously, only people with a capital of over 20-50 million had the opportunity to create family offices. Now, those with 2-5 million can either open a family office on their own or join an existing multi-family office. The reason for this is that our reality is changing rapidly. Many hi-tech entrepreneurs are making fortunes at a relatively young age. They understand that it is necessary to manage assets from the very beginning, increase or at least preserve and correctly reinvest income. The family office entrance ticket has become cheaper and more popular. In addition, many families choose to do business with the same family offices. They already have a ‘caste’, and they feel comfortable among people who have the same income and tasks. Some even write a family constitution. What is that? Please tell us more about it. The family constitution defines how the family business should be run. In other words, who deals with what issues; who, when, and how uses the assets; how these assets are allocated. In essence, the family constitution is a system that governs family relationships and controls family assets. Today all this has become fashionable and in demand. Family offices are now prestigious. Several family offices can combine their assets and jointly invest in large projects.

SUCCESSFUL BUSINESS | JANUARY-MARCH 2022

PRIVATE BUSINESS ANNA HOMENKO: WHY ARE FAMILY OFFICES OPENING IN CYPRUS?

How do they determine with whom to unite? With the help of consultants. The cost of maintaining a family office is usually 1% of the assets. This is not a lot of money for the amount of work that the office does. After all, the family office serves as a system for coordinating all processes, a communication system between all centres of the client's life. Modern family offices have a family health manager who ensures that all family members go to the best doctors, undergo regular check-ups, and access the best medical schools. Some specialists work in the field of investment or acquisition of art objects, investments in precious metals, and stones. A new niche has appeared. Young oligarchs think differently. They form a so-called matrix of powers and are ready to delegate certain tasks to managers. By the way, recently there has been a tendency to move from the south of France to Cyprus precisely to register your family office here – not only for doing business but also for more or less permanent residence of the family members on the island. Why do these people move to Cyprus? They don't take root in France. In Cyprus, people are more hospitable, ready to accept foreigners into their social circle. Moreover, it's easier to organise life here. In the south of France, family offices form teams of cooks, cleaners, service personnel who are brought in from abroad since it is very difficult to find decent and loyal local personnel. The problems in the field of labour legislation should also be noted. After working for several months, employees often sue the employer, trying to get compensation. In Cyprus, the problem of forming a team is solved by recruiting personnel from the CIS countries. These people easily take root in Cyprus and value their place of work. What are the parameters for establishing a family office in Cyprus? As a rule, people prefer to set up family offices away from the country where they do business. Asian clients mainly choose Singapore for establishing a family office, while many Europeans prefer Switzerland and Cyprus. When deciding on a location, attention is paid to many parameters. One of them is the family lifestyle. It is necessary to consider where all family members live, work, study, travel. Cyprus – as always – turns out to be a convenient point, a crossroads for those families whose vital interests are focused on the European continent. If the family is

AS A RULE, PEOPLE PREFER TO SET UP FAMILY OFFICES AWAY FROM THE COUNTRY WHERE THEY DO BUSINESS. ASIAN CLIENTS MAINLY CHOOSE SINGAPORE, WHILE MANY EUROPEANS PREFER SWITZERLAND AND CYPRUS. in America, for example, then creating a family office in Cyprus may not make sense. Another parameter is office administration. The country selection phase evaluates the structures, resources, personnel, and processes that will enable the family office to operate most efficiently. And, of course, the financial component is very important: the types and location of the family's financial assets, how much it will cost to maintain an office, apply for visas, etc. Cyprus is one of the fastest-growing economies in the EU. Many professionals in the corporate and legal sector understand the Russian mentality. From a financial point of view, Cyprus is also convenient: it is not as expensive here as, for example, in Switzerland. It has a favourable tax climate and a developed Russian-speaking community. All these factors contribute to the opening of family offices in Cyprus. What is your opinion on the latest changes in the legislation? What is changing for the better in Cyprus? In Cyprus, they realised that it was necessary to welcome a business that would bring profit to the economy. Look at the metamorphosis that happened to Limassol, after a lot of businesspeople moved here, working and spending money here, creating jobs for others. This has become a big advantage. The government has responded relatively effectively to the coronavirus situation. Now many companies have transferred their personnel to remote work. This means that it is possible to attract those not tied to a specific place of residence to the island. The business motivation system for moving to Cyprus remains attractive. Let's hope that all new and coordinated changes to the legislation will be implemented quickly. What is being done now will be based on the best practices of European countries. It will lead to further growth of the Cyprus economy and make the business climate even more favourable.

JANUARY-MARCH 2022 | SUCCESSFUL BUSINESS

FINANCE AND INVESTMENTS Successful Business Magazine

LEGAL BACKGROUND

In early 2021, the Cyprus government transposed the 5th EU Anti-Money Laundering (AML) Directive into Cyprus legislation, amending the Law for the Prevention and Suppression of Money Laundering Activities. Consequently, all companies and other legal entities that are incorporated or registered in the Republic of Cyprus are now obliged to identify and record onto the Beneficial Ownership (BO) Register all relevant information about their beneficial ownership.

DEFINITION OF BENEFICIAL OWNER

In accordance with the law, a beneficial owner is defined as any natural person(s) who ultimately owns or controls the Obliged Entity and/or the natural person(s) on whose behalf a transaction or activity is being conducted and includes at least: a. for corporate entities: the natural person(s) who ultimately owns or controls a legal entity through direct or indirect ownership of a sufficient percentage of the shares or voting rights or ownership interest in that entity, including through bearer shareholdings, or through control via other means. A shareholding of 25% plus one share or an ownership interest of more than 25% in the customer held by a natural person shall be an indication of direct ownership. b. for trusts: the settlor; the trustee(s); the protector, if any; the beneficiaries, or where the individuals benefitting from the legal arrangement or entity have yet to be determined, the class of persons in whose main interest the legal arrangement or entity is set up or operates and any other natural person exercising ultimate control over the trust by means of direct or indirect ownership or by other means. c. for legal entities such as foundations and legal arrangements similar to trusts: the natural person(s) holding equivalent or similar positions to those referred to in point (b) above.

OBLIGED ENTITIES

Entities considered as ‘obliged entities’ are the following: • Companies incorporated or registered under the Companies Law Cap. 113 • European Public Limited Liability Companies Based on a legal opinion recently obtained from the Attorney General’s Office, partnerships are considered to be legal entities and as such they must disclose BO details in the register. This will be implemented with system amendment for which a relevant announcement will be published by the Registrar of Companies in due course. The Directive does not apply to the following entities: • Companies listed on a regulated market that is subject to disclosure requirements consistent with EU law • Companies whose directors submitted an application for strike off pursuant to Article 327 (2A) (a) of the Companies Law, prior to the commencement of the Directive (12 March 2021) • Companies whose liquidation has been enacted before the commencement of the Directive (12 March 2021) • Overseas companies (branches). All entities whose strike off or liquidation has been enacted after 12 March 2021 are obliged to record the details of their beneficial owners in the BO Register. The law also provides for the creation of a BO Register for trusts. The information to be entered in the register shall include the identity of the settlor, the trustee, the protector, the beneficiaries and any other natural person exercising effective control over the trust. The information will not be accessible to the public, but it can be accessed only by competent regulators or supervising authorities. This register shall be maintained by the Cyprus Securities and Exchange Commission (CySEC); however, no official guidance has been issued yet.

March

SUCCESSFUL BUSINESS | JANUARY-MARCH 2022

Full version of this article is available at www.cy.andersen.com

PRIVATE BUSINESS www.cyprusrussianbusiness.com

ROLE OF FAMILY OFFICES TODAY PWC: WHY DO PEOPLE CREATE FAMILY OFFICES?

The rapidly transforming socioeconomic scenery, increasing complexity, scrutiny, and new regulatory requirements are some of the reasons why many wealthy families set up their own Family Office to better control their wealth and handle their private affairs. Since every family has its own unique set of circumstances, there are as many types of family offices as there are families. Some provide administrative support while others oversee the management of investments and coordinate all of the family's financial and personal/lifestyle needs.

K. TREPPIDES & CO: SUCCESSION PLANNING AND NEXT GENERATION – WHAT IS THE DANGER?

The ideal scenario for a family business is to continue to grow for future generations without any difficulties. However, it might be difficult to find the right successor within the family to lead the business into the future.

NEXT GENERATION

The next generation might not be interested in a position within the family office or might not have the capabilities to lead the office after the current generation steps down. However, it might also be the case that some of the youngest family members are willing and capable to take over the family office functions, but at the end there can only be one prevailing chief executive officer. On the contrary, non-family members might be better qualified to take over the role and therefore to run the business in a more efficient and effective way.

IMPLIED RULE OF 92%

The rule states that the 92% of a family’s wealth is lost by the third generation. The main reason behind this

WHAT FAMILY OFFICES DO Today more than ever, wealthy families are faced with new risks, challenges, and changing needs both for the business and the family. Family Offices are evolving to meet these needs: Protect the family wealth through effective asset protection, investment management, and succession planning Enhance family cohesion and transition between generations regarding the family’s legacy, strategy, values, and key decisions

Exercise better control over family holdings/assets through the right governance

Manage the various risks facing the family (including investment risk, reputation risk, etc.) by proactively preparing for various eventualities Manage all aspects of family needs and affairs, by providing the relevant support and alleviating administration burden

is that families tend to focus merely on ‘hard needs’ (such as business operations, investment strategy, and assets allocations) at the expense of recognising the importance of ‘soft needs’ (such as succession planning, philanthropy, and the responsibilities associated with having access to such vast sums of wealth). Historically, having a poorly implemented succession plan, or no succession plan, can contribute significantly to families losing almost all their wealth by the third generation. To prevent this, the establishment of a family office has an implacable role to prove that the said rule is wrong.

JANUARY-MARCH 2022 | SUCCESSFUL BUSINESS

FINANCE AND INVESTMENTS Successful Business Magazine

LEON MFO INVESTMENTS: CAPITALISING ON OPPORTUNITIES IN CYPRUS The fund industry in Cyprus has been steadily growing in recent years. However, there are still gaps in the local market in terms of the investment strategies offered to investors. Successful Business spoke to Andrey Narutskiy (AN), CEO and Executive Director, Mikhail Borisov (MB), CIO and Portfolio Manager, and Demetris Nicolaou (DN), Head of Business Development at LEON MFO Investments Limited about the situation in the market and how they plan to enhance the investment offering to wellinformed and professional investors.

In Cyprus, the total Assets Under Management for 3Q2021 reached

€11.6b

(+8.6% q-o-q).

The Undertakings of Collective Investments managed by Management Companies had a Net Asset Value of

€9.8b 24

As an entity established in Cyprus, how do you see LEON’s role in the local market? AN: We started as a multifamily office in 2013 and over the years have developed strong wealth management expertise by investing ultra-high-networth individuals’ (UHNWIs) liquid assets in global capital markets. We aim to replicate the established successful investment strategies in fixed income and hedge funds in collective funds schemes. We want to do it in Cyprus to support the fund industry here and help it grow. We could have implemented our strategies in Luxembourg which is a more established fund jurisdiction. However, we decided to launch the first funds on the island and bring our expertise to the local market. How many funds and of what type do you have now? Currently, we have three funds that are already closed, so we are not accepting new subscriptions from new investors. At the moment, we are launching two new funds that will be open to subscriptions. One of them provides an opportunity to invest primarily in U.S.

SUCCESSFUL BUSINESS | JANUARY-MARCH 2022

corporate bonds. The other deals with investing in a diversified portfolio of hedge funds. MB: The LEON Global Hedge Fund is built on our expertise accumulated in LEON for over 3 years and on my personal experience of 10 years in hedge fund strategies. We have decided to focus on private credit because we believe that in this area the most stable excess returns can be earned. This is all due to the ongoing process of banks retreating from these businesses following Basel III regulations. The fund industry has a solution and we want to capitalise on the existing opportunity. How do the strategies of the two funds differ? While the first one invests directly in U.S. corporate bonds, the hedge fund invests in companies that, in turn, invest in private credit. One company buys another’s receivables at a discount and essentially earns a yield on that. It is similar to the fixed income strategy that earns a yield but very different in terms of risk drivers and sources of return. For the hedge fund, the key is managing liquidity risk and credit risk. The focus will be on selecting the most

WE PROVIDE AN OPTION FOR INVESTORS TO EXPLORE INTERNATIONAL BOND AND PRIVATE CREDIT MARKETS WITH WELL-DIVERSIFIED PRODUCTS

FINANCE AND INVESTMENTS LEON MFO INVESTMENTS: CAPITALISING OPPORTUNITIES IN CYPRUS

reliable partners, checking all the processes, verifying the information, and arranging favourable terms for us and our investors. Besides expertise, what other security guarantees could you provide to people trusting you with their financial assets? The standard security a fund can offer is a set of regulations. We are tightly regulated both at a firm’s and at each fund’s level. We have a comprehensive infrastructure of custodians, auditors, and counterparties. In addition, with the hedge fund, most of the strategies imply that loan arrangements should be collateralised. In terms of credit risk, this approach provides a much higher level of security than investing directly in bonds. DN: I would say that both strategies were missing from the local market. There are many investors who still keep their money in local banks getting a nextto-zero return. We provide an option for investors to explore international bond and credit markets with well-diversified products and a possibility to achieve returns well above the minimum that they get from the banks. What would be the specific benefit for investors participating in LEON’s new funds? DN: It is important to mention the expertise of the team managing the funds, the ease with which investors can subscribe, manage, and invest in these funds, as well as transparency, investor protection, and regulations. MB: It is a unique product that offers investors a risk-return profile that is usually hard to access, especially in the hedge fund’s case. Normally, the minimum subscription is €1 million per fund. Building a diversified portfolio would require €10-15 million from the investor. Our minimum threshold is much lower. AN: We already have a distinguished track record. We have built a successful wealth management business; LEON currently manages €1 billion in individual portfolio management. This has

Left to right: Mikhail Borisov, Andrey Narutskiy, Demetris Nicolaou

NORMALLY, BUILDING A DIVERSIFIED PORTFOLIO REQUIRES €10-15 MILLION FROM THE INVESTOR. OUR MINIMUM THRESHOLD IS MUCH LOWER been achieved within 8 years. Now we are launching a new line of business based on a solid platform, on the backbone of our existing business. It gives us credibility. We also have seed capital from our existing individual investors. All the funds that we are launching will have €5-10 million of seed capital. What differentiates us from global fund players is that our fund managers are physically based in Cyprus, they can be easily reached at practically any time. Investors can always contact us and get instant updates which is another big advantage. What size will the funds be? Our target is to raise €100 million within 3 years for each fund, but the sky is the limit at this stage.

JANUARY-MARCH 2022 | SUCCESSFUL BUSINESS

FINANCE AND INVESTMENTS Successful Business Magazine

MARKET OUTLOOK BY LEON MFO INVESTMENTS LTD In 2021, we witnessed the post-pandemic recovery for some economies, especially the U.S. economy. In 2022, this recovery is expected to continue and become more global as Europe and other major economies are forecasting higher GDP growth rates. Global trade resumed in 2021 and is expected to remain strong this year. Bond and credit markets typically reflect macroeconomic conditions. With improving consumer confidence and healthy corporate performance, credit investors will have a wider range of opportunities going forward. In addition, the relatively high valuations of equities may induce investors to look further into bonds/credit and consider various strategies. LEON MFO Investments Limited is launching two funds in the first quarter of 2022 that will allow investors to access the corporate bond and credit markets. The firm is using its strong investment expertise in wealth management for MFO clients (with more than $1 billion under management) and is offering its best performing investment strategies through these funds to the local Cypriot institutional and HNWI clients. For investors who prefer to invest in EUR, the funds offer EUR currency hedge. This is why two share classes are available (EUR and USD) allowing investors to select the share class most appropriate for them.

LEON FUNDS LEON MFO Investments Limited is regulated by the Cyprus Securities and Exchange Commission. License No. AIFM 37/56/2013 Tel.: +357 25 268 120 www.leoninvestments. com.cy

The Leon Income Fund RAIF V.C.I.C. PLC offers investors the opportunity to participate in the global bond market with a medium-risk strategy that has worked well for Leon’s discretionary portfolios since 2015. This fund’s portfolio is well diversified and consists of leading U.S. and global companies. With well-defined portfolio parameters, the fund achieves optimal diversification and risk reduction. This

SUCCESSFUL BUSINESS | JANUARY-MARCH 2022

fund is targeting a net return of 3.0% in EUR or 4.0% in USD terms. With banks offering very low or sometimes negative interest rates on deposits, this fund provides a choice that was missing for the local market. The minimum investment is EUR 125,000 and investors can subscribe or redeem monthly. The Leon Global Hedge Fund RAIF V.C.I.C. PLC invests in specialised hedge funds which focus on two broader themes: a) Short-term alternative credit and b) Arbitrage. Short-term alternative credit includes trade finance, consumer finance, receivables, bridge credit, and more. The Alternative credit portfolio benefits from increases in short-term interest rates and provides a good hedge against inflation. On the other hand, arbitrage opportunities are sought in interest rate arbitrage, equity index arbitrage, FX or commodity arbitrage, and volatility arbitrage. The Arbitrage portfolio benefits from market volatility and provides a good hedge against market corrections. Managed by an experienced team, this fund identifies hedge funds that have consistently performed well in the above areas and funds that have low correlations between them. This is a disciplined strategy that has consistently offered attractive returns to investors since 2018. The targeted net return is around 5% in EUR or 6% in USD terms. The minimum investment is EUR 250,000 with monthly subscriptions and quarterly redemptions with 190-day notice. Both funds are managed by LEON MFO Investments Limited and addressed only to well-informed and professional investors. For more information, please contact LEON MFO Investments Limited at 25 268 120 or demetris.nicolaou@ leonmfo.com Disclaimer: This article does not disclose all associated risks and should not be considered as an offer or invitation to subscribe to units or shares in the above RAIFs.

FINANCE AND INVESTMENTS BUSINESS PROFILE

LEON MFO INVESTMENTS LTD Leon MFO Investments Ltd was established in 2013 and was initially authorised as an Investment Firm by the Cyprus Securities and Exchange Commission (CySEC), with authorisation number 245/14. In April 2020, the Company received authorisation from the CySEC as an Alternative Investment Fund Manager (AIFM) in accordance with the provisions of the AIFM Law, with authorisation number AIFM 37/56/2013.

MISSION Our mission is to help clients manage their wealth by implementing thorough, bespoke, and disciplined investment strategies. We continuously strive to provide objective, unbiased, and professional advice for optimal investment decisions.

TEAM Our team combines professionals with many years of experience and strong track record in the key areas of wealth management, investment management, financial analysis, and succession planning.

APPROACH We aim to provide truly customised investment solutions to high-net-worth individuals and their families. In addition to our in-house expertise, we collaborate with selected partners among leading investment banks, asset managers, tax and legal experts to provide practical and sophisticated solutions to our clients.

SERVICES • Fund Management. We manage various types of funds mostly investing in highly liquid assets at global capital markets. Our funds are addressed to well-informed and professional investors. • Fund Hosting. We can host funds as investment structures for high-net-worth individuals and undertake the entire fund management process. • Investment Management. We provide discretionary portfolio management and related investment services to meet each client’s investment objectives. • Investment Advice. We offer customised investment advice and wealth management strategies, succession planning, and other family office services.

LEON MFO Investments

Andrey Narutskiy CEO and Executive Director of LEON MFO Investments

Contact details: 37 Theklas Lisioti St., Gemini House, Office 301 CY-3030 Limassol, Cyprus Tel.: +357 25 268 120 | Fax +357 25 260 095 leonmfo@leonmfo.com | www.leoninvestments.com.cy

JANUARY-MARCH 2022 | SUCCESSFUL BUSINESS

FINANCE AND INVESTMENTS Successful Business Magazine

SIGNIFICANT GROWTH IN INVESTMENT FUND SECTOR The Cyprus Investment Funds Association (CIFA) announced that the investment fund sector enjoyed significant growth during 2021, with the total amount of Assets under Management (AuM) increasing by 48.7% despite the adverse effects of the pandemic. “During the new year ahead, we will continue our targeted actions to extend the promotion of the sector abroad, in specific markets which present concrete prospects,” CIFA president Andreas Yiasemides said. “The Cypriot Investment Funds’ assets have already approached €12 billion, under adverse conditions, and this makes us very confident that with correct and stable steps we will achieve the medium-term goal we have set: to raise the assets of the funds in Cyprus to €25 billion,” he added.

“The sector is now established as one of the most promising of the Cypriot economy and one of the fastest-growing at a European level,” CIFA said in a statement, adding that it wishes to express its “satisfaction with the sector’s course and believes that its upward but sustainable growth will continue in 2022”. According to a recent report by the Cyprus Securities and Exchange Commission (CySEC), Assets under Management of Cypriot funds reached €11.6 billion at the end of the third quarter of 2021, a year-on-year increase of 48.7%. Moreover, CySEC added that it currently supervises 298 Management Companies and Undertakings of Collective Investments (UCIs), a 9.1% increase year-on-year. CIFA explained that the legislative and tax framework that governs Collective Investments in Cyprus is comparable to other European investment destinations, while the cost of establishing and operating these organisations is noticeably lower. “It consists of no coincidence that, according to data from the European Fund and Asset Management Association (EFAMA), 47% of the Cypriot Investment Funds net assets were related to cross-border investments in 2020,” CIFA said. “This ranks Cyprus fourth in Europe, with Ireland, Luxembourg, and Malta as the only European countries ahead,” the association added. In terms of how the investment fund sector contributes to the Cypriot economy, CIFA said that roughly 140 collective investment organisations invest in Cyprus, in part or fully, with the full amount reaching €2.3 billion at the end of the third quarter of 2021, explaining that this represents 19.5% of the total amount of Assets under Management.

SUCCESSFUL BUSINESS | JANUARY-MARCH 2022

Source: CIFA, Cyprus Mail

FINANCE AND INVESTMENTS BUSINESS PROFILE

M. Target Group: your success is our target M. Target Group was established in 2014 in Cyprus, a perfect location for globally oriented companies and high-net-worth individuals; starting as a medium-size firm offering accounting, tax planning and consulting services, over the years it has built a solid reputation for balancing strategic thinking with a ‘can-do’ approach as well as a loyal base of both local and international customers, while expanding into new fields and new markets with a focus on a proactive approach to addressing challenges of the changing business environment. KEY BRANDS At present, M. Target Group is represented by four well-reputed brands that provide a wide range of professional services, from accounting and business consulting to facility management and company incorporation and administration. We assist our clients with corporate structuring, tax optimisation, due diligence, risk assessment tasks, and more.  M. TARGET BUSINESS CONSULTANTS LTD is the oldest company of the Group, providing high-level professional services in such fields as business consulting, accounting, and international tax structuring  MITHRIDATES LTD is a facility management company offering serviced offices for local and international clientele in several prime locations across Cyprus and Dubai, UAE  SIMONUS CONSULTING LTD licensed by the Cyprus Securities and Exchange Commission (CySEC), provides a full range of administrative services, inclusive of nominee services, trustee and company management services  M. TARGET MANAGEMENT LTD was established to develop and manage local and global highpotential projects drawing on the Group’s diverse expertise and market insights

Odysseas Melikides, CEO and founder of M. Target Group “Our clients value our input because we think outside the box, we see things from their perspective, and we speak their language. We aim to keep everything simple, brief, and relevant. We believe in a value-adding, business-focused, long-lasting cooperation”

We believe that every business, regardless of its size, should be entitled to the best professional advice available in the today’s market; that’s why we invite you to contact us for any queries, personalised proposal, or consultation.

41 Misiaouli & Kavazoglou St., 2nd floor, Office 201 3016 Limassol, Cyprus

Tel.: +357 25 871414 Fax: +357 25 106155

WhatsApp, Viber: +357 96 636626

JANUARY-MARCH 2022 | SUCCESSFUL BUSINESS

Successful Business Magazine

Cyprus in New Tech World Sophisticated technologies slowly become part of Cyprus business life. AI, algorithmic trading, blockchain, Big Data – these make the news, are discussed during business events, and fill up the agenda at meetings of the Cyprus Government. In this section, we summarise what Cyprus does to follow the trends and be more proactive in understanding these new technologies and their impact on the local and international business on the island. This section titled ‘Technology and Innovation’, is dedicated to all recent and upcoming changes in Cyprus laws, regulations, and strategies. You can learn about the priorities and vision of CySEC. Find out why the island is good for digital nomads. Think of whether it is possible to tockenise a real estate deal in Cyprus. Explore how to register as a crypto asset services provider (CASP). Or get the gist of the blockchain and crypto basics. In the next issue in April, the ‘Technology and Innovation’ section will be updated with articles on high tech in green energy and global energy transformation. During the upcoming business trips to the Skolkovo innovation events, the KhantyMansiysk International IT forum, the Technopolis in Novosibirsk, and the Surgut Oil and Gas International Technology Exhibition, the participants will have an opportunity to see some practical examples of how these and other technologies are being implemented.

SUCCESSFUL BUSINESS | JANUARY-MARCH 2022

КИПР В МЕНЯЮЩЕЙСЯ ГЕОПОЛИТИКЕ: АЛЬЯНСЫ И КОНФИГУРАЦИИ

BLOCKCHAIN AND CYPRUS What You Need to Know JANUARY-MARCH 2022 | SUCCESSFUL BUSINESS

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SUCCESSFUL BUSINESS | JANUARY-MARCH 2022

INTERVIEW DR GEORGE THEOCHARIDES: AS REGULATORS, WE NEED TO BE PROACTIVE

DR GEORGE THEOCHARIDES: AS REGULATORS, WE NEED TO BE PROACTIVE The emerging crypto industry is still unchartered waters in many regards. But the Cyprus Securities and Exchange Commission is working towards eliminating the regulatory gaps and ensure the highest level of investor protection. The Successful Business Magazine asks the Commission head, Dr George Theocharides, about the current crypto landscape in the EU and in Cyprus and the recent and forthcoming regulatory developments. In your opinion, what are the greatest regulatory risks that Cyprus faces today? The trends that we have seen in the last decade or so in financial services are more digitalisation, more online, and mobile trading platforms. We have also seen more sophisticated technologies, such as artificial intelligence, algorithmic trading, blockchain technologies, machine learning, Big Data Analytics, Robo-Advisors, and social trading. Obviously, these global trends bring many opportunities, but at the same time, they come with risks relating to the protection of the investors, to cases of money laundering and terrorist financing, and risks around cybersecurity. As regulators, we need to be proactive in understanding these new technologies and how they impact financial services in order to mitigate the risks and protect investors. It is essential

that investors understand these risks before proceeding with any investment, so they are not lured into unsuitable investments based on inaccurate or incomplete information. Inconsistent liquidity, unregulated price discovery mechanisms, insider dealing and market abuse in relation to crypto-assets, lack of pre- and post- trade transparency rules, all undermine investor protection. The nature of cryptoassets, which means they are to some extent anonymous or pseudo-anonymous and can be used in the context of electronic contactless transactions and from anonymous crypto wallets and other emerging products, also makes them vulnerable to the risk of money laundering and the financing of terrorism. What's the solution then? When it comes to digital assets and cryptoassets, the regulation is evolving.

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There is a lot of work being done both at the national and European level. A few months ago, the Cyprus Securities and Exchange Commission (CySEC) issued a Policy Statement on the Registration and Operations of Crypto Asset Services Providers (CASP) to outline its finalised rules for CASPs under the AML/CFT Law. Additionally, we issued the CASP Registration Directive and the Directive for the Prevention and Suppression of Money Laundering and Terrorist Financing, which elaborates on the next steps for CASPs and CySEC’s expectations. We expect Crypto Asset Services Providers to abide by their obligations stemming from CASP Rules, including but not limited to their obligations among others on:  the fitness and probity of the CASP Beneficiaries and persons holding a management position  performing Know Your Client and other client due diligence measures  drawing the economic profile and identifying the source of funds of their clients  identifying and reporting suspicious transactions, and  undertaking a comprehensive risk assessment in relation to their clients and activities and take proportionate measures per client, activity and cryptoasset in question. Details can be found on the CySEC website, www.cysec.gov.cy. CySEC also continues to analyse market practices and will assess the effectiveness of existing rules. Where necessary, we will act to issue further guidance to ensure the compliance of supervised entities

IT IS ESSENTIAL THAT INVESTORS UNDERSTAND THE RISKS BEFORE PROCEEDING WITH ANY INVESTMENT

SUCCESSFUL BUSINESS | JANUARY-MARCH 2022

with the regulatory framework. CySEC expects these kinds of initiatives to alleviate some, but not all, of the risks involved in cryptoasset space, and we welcome developments at EU level, under the proposed Regulation on Markets in Crypto Assets (MiCA). In September 2020, the European Commission proposed a new regulation on cryptoassets (MiCA). This regulation will form part of the EU’s Digital Finance Strategy and is expected to significantly impact the operation of the crypto market in the EU. It will increase consumer protection by establishing clear crypto industry conduct and introduce new licencing requirements. This proposal, which covers cryptoassets falling outside existing EU financial services legislation, as well as e-money tokens, has four general and related objectives. The first objective is one of legal certainty. For cryptoasset markets to develop within the EU, there is a need for a sound legal framework, clearly defining the regulatory treatment of all cryptoassets that are not covered by existing financial services legislation. The second objective is to support innovation. The development of cryptoassets and the wider use of DLT requires a safe and proportionate framework to support innovation and fair competition. The third objective is to instil appropriate levels of consumer and investor protection and market integrity given that cryptoassets not covered by existing financial services legislation present many of the same risks as more familiar financial instruments. Finally, the fourth objective is to ensure financial stability. Cryptoassets are continuously evolving. While some have a quite limited scope and use, others, such as the emerging category of ‘stablecoins’, have the potential to become widely accepted and potentially systemic. This proposal includes safeguards to address potential risks to financial stability. I should also mention that – until MiCA becomes effective – a national Bill has been drafted by the Ministry of Finance (an Umbrella Law) to regulate

INTERVIEW DR GEORGE THEOCHARIDES: AS REGULATORS, WE NEED TO BE PROACTIVE

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THE EU MiCA REGULATION WILL INCREASE CONSUMER PROTECTION BY ESTABLISHING CLEAR CRYPTO INDUSTRY CONDUCT AND INTRODUCING NEW LICENCING REQUIREMENTS

the development of DLT-Blockchain Technology/Smart Contracts and provide legal certainty to this market. Under this Bill, CySEC is empowered to draft other legislative amendments if it deems necessary for further regulating the provision of investment services in this space. Cyprus has attracted a number of large CIF companies and some concentrate in CFDs. These tend to have hundreds of thousands of trading accounts and millions of transactions every day. Are you confident that Cyprus' current regulatory system is adequate to protect investor interests in companies like this? EU financial regulation applies uniformly to all EU Member States, save for certain minor Member State discretions provided for in the respective EU legislation. As a result, investment firms domiciled in any of the EU Member States must abide to the same rules and in return, benefit from the right to freely provide their services throughout the EU. The regulatory and supervisory landscape of the financial sector in Cyprus mirrors that of the rest of the EU so that investors benefit from the high standards of protection we enforce.

Dr George Theocharides Chairman of the Cyprus Securities and Exchange Commission (CySEC) Dr Theocharides served as CySEC’s Vice Chairman since July 2020 and was appointed new Chairman in 2021. As an Associate Finance Professor at the Cyprus International Institute of Management (CIIM) and Director of the MSc in Financial Service Programme from September 2010 until July 2020, he has extensive work experience in the wider financial sector. Prior to joining CIIM, he worked as an Assistant Professor of Finance at the Sungkyunkwan University of South Korea and as an International Faculty Fellow at the Sloan School of Management of the Massachusetts Institute of Technology (MIT). In the past, he served as a member of the Board of the Cyprus Securities and Exchange Commission, a member of the Interim Board of Bank of Cyprus, Chairman of the Board of the Cyprus Blockchain Technologies Ltd, as well as a member of the Board of Directors of the Cyprus-Kuwait Business Association. He also served as a member of the Training/HR Committee of the Cyprus Investment Funds Association (CIFA), as well as a non-executive member of the Board of Directors for a number of organisations and companies in the financial services sector. He is also an Associate member of the Chartered Institute for Securities & Investment (CISI) and a Research Associate at the UCL Centre for Blockchain Technologies (UCL CBT). Dr Theocharides holds a degree of BEng (Hons) in Electrical Engineering & Electronics from the University of Manchester (U.M.I.S.T.), an MBA from the University of San Diego, and a PhD in Finance from the University of Arizona.

JANUARY-MARCH 2022 | SUCCESSFUL BUSINESS

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INVESTMENT FIRMS DOMICILED IN ANY OF THE EU MEMBER STATES MUST ABIDE TO THE SAME RULES AND, IN RETURN, BENEFIT FROM THE RIGHT TO FREELY PROVIDE THEIR SERVICES THROUGHOUT THE EU Clearly, there is a high level of demand globally for these products. CySEC has always held the belief that regulating these products appropriately is the safest, most diligent way of allowing these firms to provide these services, and is most in line with serving investors’ interests. We continually assess and monitor regulated entities to tackle any concerning practices to ensure that investors protection is not compromised. Since 2015, CySEC applies a risk-based supervisory approach, which governs how we determine the entities and market segments that pose the greatest risks to investors, and which are subject to the closest scrutiny. Our risk-based supervisory approach follows the same blueprint for supervision of other European supervisors and we have been in constant and close collaboration with ESMA and IOSCO. According to our annual Supervisory Action Plans, each year both onsite inspections and desk-top reviews are undertaken on supervised entities, together with full audit inspections or thematic or targeted basis. As a result, CySEC imposed more than €10 million administrative fines only for CIFs. It also suspended the licence of more than 30 CIFs, which had significant problems and called upon them to take a number of corrective measures to improve their internal procedures, regulations and practices in order to fully comply with their legal obligations. In addition, CySEC revoked the operating licence of more than 15 CIFs, in which serious violations of the legislation were identified and a significant number of CIFs voluntarily resigned from the licence they held. CySEC will continue to conduct in-depth audits and take all the appropriate actions to safeguard investor protection and the smooth functioning of the market.

SUCCESSFUL BUSINESS | JANUARY-MARCH 2022

Also, we are in the process of developing new procedures and a methodology to conduct data-driven supervision, which will allow us to identify any irregularities and risks in the market at an early stage. In this respect, CySEC is responding to the need to manage Big Data with RegTech systems that will use Artificial Intelligence and Cloud Computing. These solutions will enable CySEC to quickly screen data, representing large and varied trading volumes, in order to automatically detect risks and irregularities at an earlier stage and, thus, be able to react more quickly against these risks. A recent CySEC Policy Statement essentially required investment services to be ring-fenced from crypto-asset activities. What is the rationale underpinning this approach? There is very straight-forward reason for this – we don’t want to see issues spill over into investment services from other activities such as cryptoasset activities that are not fully regulated. Do investors in Cyprus understand the risks of investing in cryptocurrencies? Is CySEC educating investors about these risks? Right now, what we are seeing around the globe is a lot of hype around cryptoassets; I would even call it irrational exuberance. This is understandable because in the financial markets a new product creates a lot of attention similar to the dot.com bubble in the late 1990s or the complex, securitised financial products in the 2000s. But I think the market still has a lot of information to digest and understand, particularly in terms of what cryptocurrencies are, how the mechanics of cryptocurrency

INTERVIEW DR GEORGE THEOCHARIDES: AS REGULATORS, WE NEED TO BE PROACTIVE

work, what their purpose is and what the risks are. There is a general lack of knowledge among investors around the globe in terms of cryptoassets. Providing knowledge and education around cryptoassets and improving financial education and skills in general is part of the role of the regulators. CySEC undertakes various educative actions and initiatives, through publications on its website and in the media. CySEC participates in World Investor Week 2021, with the aim of contributing to the global drive to educate and protect investors. Over the past year, CySEC has been part of a national effort and is participating at the ad-hoc Committee for Financial Literacy and Investor Education, together with the Central Bank of Cyprus, the Ministries of Education and Finance and our two state universities to create a national strategy for financial literacy. The aim is to submit the national strategy to the Council of Ministers in early 2022. But while education is part of our mandate, it’s also the responsibility of market participants and the professionals of the industry to educate investors about these types of assets by providing them with the necessary information in order to understand if the assets match their needs. What can investors do to identify/avoid crypto and CFD fraud and scams? The most important thing investors must do when considering an investment is to do some research into the company offering the product or service, and consider whether seeking independent professional advice from another regulated entity might be appropriate. CySEC has a full list of all the companies it regulates on its website, which is

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easy to check. If a company is not listed by CySEC or another EU competent authority and is fraudulently claiming to be a licensed firm, investors will not have the same protections they would have had with a regulated entity. It is critical that investment firms classify their clients in an appropriate manner so that more sophisticated, and often higher-risk products and services are only targeted at professional investors. This marketing process must be fair and not misleading. CySEC regularly updates its ‘Warnings’ website on prevalent scams and nefarious operators. Investors are encouraged to keep an eye on this so they are aware of what types of fraud and scams are being tried. Typically, investors should be especially wary if they feel under pressure to make a decision to invest quickly (such as a time-limited offer), or are offered returns on their investment that sound too good to be true, or are told about products or services that don’t adequately explain the risk of losing money. CFD trading is inherently speculative, and firms must uphold their responsibility to warn their clients that their capital is at risk. Aggressive cold-calling tactics either by phone, email, online pop-ups, or on social media are also likely to be perpetrated by unscrupulous providers rather than by reputable players in the market. In the past, we have also observed cases where people have fraudulently presented themselves as CySEC representatives in an effort to defraud investors. For this reason, CySEC has issued several announcements informing the public that it never sends unsolicited correspondence to investors or members of the public, nor does it ever request any personal data, financial or otherwise.

PROVIDING KNOWLEDGE AND EDUCATION AROUND CRYPTOASSETS AND IMPROVING FINANCIAL EDUCATION AND SKILLS IN GENERAL IS PART OF THE ROLE OF THE REGULATORS JANUARY-MARCH 2022 | SUCCESSFUL BUSINESS

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As we move into a more digital world, the number of risks to investors is growing constantly. This is not only due to platformrelated fraud or illicit activity, but also due to hacking and cybersecurity. Does CySEC take cybersecurity into account when auditing regulated firms that use investors deposits or accounts? Will you be doing this in the future? Data security is an organisational requirement under the investment law. CIFs must have sound security mechanisms in place to guarantee the security and authentication of the means of transfer of information, minimise the risk of data corruption and unauthorised access, and prevent information leakage in order to maintain the confidentiality of the data at all times. It’s part of CySEC supervisory action plan each year.

CYSEC HAS RECEIVED FUNDING APPROVAL FROM THE EU RECOVERY AND RESILIENT FUND TO EXPLORE THE OPPORTUNITY OF TRANSFORMING ITS INNOVATION HUB INTO A REGULATORY SANDBOX

What are your plans for the nearest six months? What to expect from CySEC? Our goal as CySEC is to continue acting as a protective shield for investors through effective supervision and guiding the sound development of the sector. As part of our mission we are increasing the level and the frequency of supervision, particularly of online trading platforms, by expanding our internal resources. Given the international and largely web-based nature of the activities of CIFs, CySEC has acquired a supervisory system for monitoring the supervised entities’ online marketing activities/materials. This tool will therefore further enhance CySEC’s ability to collect, analyse, and monitor the marketing communications of CIFs. In terms of policy making our aim is to consult on enhancing the clients’ money rules by mid to late 2022. In addition, we have received funding approval from the EU Recovery and Resilient Fund to explore the opportunity of transforming our Innovation Hub into a Regulatory Sandbox. In this controlled environment, fintech startups and other entities will be able to test their innovative products or services in real conditions under the regulator’s supervision. We are also launching the Trust Register Portal which will keep the details of the beneficial owners of express trusts and similar legal arrangements. The Portal is an additional tool to improve transparency and combat money laundering and terrorist financing. CySEC is also introducing new exams for the providers of financial information in regulated entities as part of the financial education of industry professionals to ensure a high standard of service. In 2020, CySEC added a new regulatory category, Mini Managers, and a new investment product, Crowdfunding. What has been the reaction to these so far? Is there scope to introduce other new regulatory categories?

SUCCESSFUL BUSINESS | JANUARY-MARCH 2022

INTERVIEW DR GEORGE THEOCHARIDES: AS REGULATORS, WE NEED TO BE PROACTIVE

Although the initial reaction has been fairly slow, we have recently approved the licence of the first mini manager and also pre-approved the licence of the first crowdfunding platform. Once these new entities start operating, and if they end up being successful, I do see a trend towards more applications in the future for both mini-manager and crowdfunding platforms. CySEC is also introducing a new regulatory category for fund administrators. The draft law will be submitted to the Ministry of Finance in 2022. The fund administration is not regulated at EU level; however, we believe that regulating these entities will contribute to enhancing investor protection and market integrity by ensuring authorisation and supervision throughout the delegation chain. We are also looking at loan origination and loan participation for the funds industry. In many countries, there are restrictions on these so we are being cautious to make sure we address the relevant risks. Environmental, social and governance-related factors are rapidly being integrated into the institutional framework of the capital markets. How ready are the regulated entities to adopt the specific criteria? As in the case of any new regulation not only in Cyprus but at EU and global level, we expect that there will be challenges in the application of ESG until a level of maturity is reached. Market participants and investors are not fully informed about what ESG entails and while some regulations have been passed in Europe, there's still no uniformity of regulatory practices and approaches. There is always the risk of greenwashing or mislabelling investments towards ESG. If you have an investment that labels itself as ESG, somebody needs to approve it, somebody needs to rate it, but the criteria for this are not clear yet. More work needs to be done at national and EU level to create sustainable growth in this market.

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MARKET PARTICIPANTS AND INVESTORS ARE NOT FULLY INFORMED ABOUT WHAT ESG ENTAILS AND THERE'S STILL NO UNIFORMITY OF REGULATORY PRACTICES AND APPROACHES

In Cyprus, although we are yet to see a large-scale shift towards responsible investments, we have already signed up a few alternative investment funds with an investment policy focusing on ESG factors. Data gathered from asset managers in Cyprus showed that €40.2 million of funds under management have a sustainable investment strategy, which is indeed a very promising step in the right direction. To encourage and assist investors and regulated entities in this regard, and in line with the EU action plan for financing sustainable growth, CySEC has confirmed its commitment to fostering compliance with sustainable finance standards, and in early 2021 we created a dedicated section on our website on sustainable finance, which gives information on the legislative measures being introduced at the EU level.

JANUARY-MARCH 2022 | SUCCESSFUL BUSINESS

TECHNOLOGY AND INNOVATION Successful Business Magazine

NEW REGULATORY FRAMEWORK FOR CRYPTO ASSET SERVICES PROVIDERS The Cyprus Securities and Exchange Commission (CySEC) has published a clarification on the anti-money laundering and counter-terrorist financing (AML/CFT) supervision for cryptoasset operations undertaken in or from Cyprus. The Successful Business Magazine presents the summary of this publication.

If you are a Crypto Asset Services Provider (CASP), within the meaning of the Prevention and Suppression of Money Laundering and Terrorist Financing Law (AML/CFT Law), that provides services in or from Cyprus, you must formally register with CySEC. If you are a CASP established in the EEA and registered with one or more EEA National Competent Authorities for AML/CFT purposes in relation to all services or activities undertaken or intended to be undertaken in Cyprus (i.e. involving Cypriot residents, including incorporated or unincorporated entities based in Cyprus), you must submit a notification. You should provide evidence in relation to your valid registration for each service or activity. Where these services or activities are not covered by the framework that governs your registration for AML/CFT pur-

SUCCESSFUL BUSINESS | JANUARY-MARCH 2022

poses, you should submit an application to be registered as a CASP with CySEC.

New businesses must register with CySEC before commencing their operations in or from Cyprus. Existing businesses that demonstrate a material existing crypto-asset activity had to submit an application before the end of October 2021 and be fully compliant with the AML/CFT Law and the Directives issued pursuant to the AML/CFT Law.

REGULATORY FRAMEWORK

The applicable regulatory framework comprises: • The AML/CFT Law • The CySEC Directive for the CASP register • The CySEC directive for the prevention and suppression of money laundering and terrorist financing. The regulatory framework includes rules, inter alia, in relation to: • The fitness and probity of the CASP beneficiaries and persons holding a management position • The conditions in relation to CASPs registration

TECHNOLOGY AND INNOVATION NEW REGULATORY FRAMEWORK FOR CRYPTO ASSET SERVICES PROVIDERS

• The organisational and operational requirements • Preforming Know Your Client and other client due diligence measures • Drawing the economic profile of clients • Identifying the source of client funds • Monitoring the clients’ transactions • Identifying and reporting suspicious transactions • Undertaking a comprehensive risk assessment in relation to clients’ activities and take proportionate measures per client, activity and crypto-asset in question. CySEC’s approach on CASPs and their operations is further elaborated in the Policy Statement PS-01-2021.

CRYPTO-ASSET ACTIVITIES AND INITIAL CAPITAL CASP Class 1

Class 2

HOW TO REGISTER

CASPs that provide services in or from Cyprus must submit a duly completed application form, along with relevant questionnaires and any additional information and/or required evidence, in accordance with CySEC’s Announcements on the submission of applications and relevant correspondence, as amended from time to time and pay the corresponding fee. In addition to this, an electronic version of the application form (i.e. only Form 188-01) should be also submitted at caspregistrations@ cysec.gov.cy. CASPs established in the EEA that are registered with one or more EEA National Competent Authorities for AML/CFT purposes in relation to all services or activities undertaken or intended to be undertaken in Cyprus, must submit a notification form at eeacasp@cysec. gov.cy.

Class 3

Type of crypto-asset activity

Initial Capital

CASPs that provide investment advice

€50,000

CASPs providing the service referred to in Class 1 and/or any of the following services: • reception and transmission of client orders • execution of orders on behalf of clients • exchange between crypto-assets and fiat currency • exchange between crypto-assets • participation and/or provision of financial services related to the distribution, offering and/or sale of cryptoassets, including the initial offering • placement of crypto-assets without firm commitment • portfolio management

€125,000

CASPs that provide any of the services referred to in Class 1 or 2 and/or: • administration, transfer of ownership, transfer of site, holding, and/ or safekeeping, including custody, of crypto-assets or cryptographic keys or means enabling control over crypto-assets • underwriting and/or placement of crypto-assets with firm commitment • operation of a multilateral system, which brings together multiple thirdparty buying and selling interests in crypto-assets in a way that results in a transaction

€150,000

REGISTRATION FEES

CySEC registration charges are as follows: • €10,000 for the examination of an application. Successful applicants will not be required to pay an additional fee for the first year of their registration. • €5,000 for the purposes of renewal of registration per year.

JANUARY-MARCH 2022 | SUCCESSFUL BUSINESS

TECHNOLOGY AND INNOVATION Successful Business Magazine

MOVING FORWARD: NFTS, META, WEB3, AND CYPRUS DTL STRATEGY Blockchain technology enables the digital ownership, transfer, and storage of assets without the necessary need of a central third party or intermediary. The attributes of this technology, wrapped nicely with token interface standards such as that of NFTs, are revolutionising the ownership of real and virtual word assets. It is possible to tokenise a real estate deal in Cyprus, or even to purchase land in a virtual world. Not only that, through dApps, blockchain technology has pushed to revolutionise the financial products and financial concepts as we know them, where Web3 ecosystem is creating the future of finance in the DeFi sector.

THE NFT HYPE – JUST THE BEGINNING? Without a doubt, year 2021 has been the year of non-fungible tokens, commonly known as NFTs. There has been an explosion of news on how Nyan Cat has being sold over and over as a one-ofa-kind piece of crypto art. As of the time of writing this article the last sell price is at 300 ETH, approximately $1.3 million. We have seen the CryptoPunks, 10,000 uniquely generated characters create havoc amongst crypto enthusiasts while everyone was trying to own one, where current floor price touches $500,000. Owning a Bored Ape grants access to a private Yacht Club with benefits only members can have. Not only that, wellknown artists launch their own new art pieces, while leveraging art digitisation and the blockchain technology, such

SUCCESSFUL BUSINESS | JANUARY-MARCH 2022

Dr Andreas Mathikolonis Senior Investment Analyst | Quonota Investments Ltd as the Currency. While the art at the beginning exists in both physical and digital forms, the owner of the NFT must decide within a certain timeframe which one of the two to keep, as only one can exist, according to the artists’ own set of rules. According to 'The Block', a leading research, analysis, and news brand in digital assets space, the interest in NFTs boomed in the second half of the year, reaching weekly trading volume of $250 million worth of NFTs (Figure 1), close to $7.7 billion total volume in just six months. Putting all the buzz aside, this new application concept of blockchain technology is revolutionising the ownership of real and virtual world assets. In the most abstract form, tokenisation converts the value stored in tangible or intangible objects into non-fungible tokens which per definition are unique,

TECHNOLOGY AND INNOVATION MOVING FORWARD: NFTS, META, WEB3, AND CYPRUS DTL STRATEGY

FIGURE 1. WEEKLY TRADE VOLUME OF NFTS BY CATEGORY Gaming

Source: Cryptoslam

Art and Collectibles $1.25b $1b $750m $500m $250m $0 Jan '21

Mar '21

irreplaceable, and non-interchangeable with any others. Owning the NFT of an asset enables the digital ownership, transfer, and storage of the asset, without the necessary need of a central third party or intermediary.

WHAT ABOUT METAVERSE? Alongside NFTs, ‘metaverse’ seems to be gaining significant momentum. We have recently seen social platform Facebook renamed to ‘Meta’, in an attempt to reflect the focus of the company into metaverse. The term ‘metaverse’ is often traced to Neal Stephenson’s 1992 science fiction novel, the ‘Snow Crash’. Many often relate it to a more recent inspiration, the Earnest Cline’s 2011 novel, ‘Ready Player One’, directed by Steven Spielberg. Metaverse is a place where our physical world blends with a virtual one, where people become what they dream of in their everyday lives. Using Virtual Reality (VR), Augmented Reality (AR) gadgets and not only, people can express their inner selves by creating 3D avatars that live in this virtual word. The metaverse is set to include realistic and interactive assets, the ability to move from one place to another and even take advantage of strategy and problem-solving in a digital setting. That is where NFTs, the digital collectables,

May '21

Jul '21

Sep '21

Nov '21

OWNING THE NFT OF AN ASSET ENABLES THE DIGITAL OWNERSHIP, TRANSFER, AND STORAGE OF THE ASSET, WITHOUT THE NECESSARY NEED OF A CENTRAL THIRD PARTY OR INTERMEDIARY come into play. Not all, but in many cases, the NFTs will be integrated into such virtual worlds, taking advantage of the ownership and allowing the usage of such assets within a metaverse world. We have already seen metaverse worlds in the form of a game, even virtual music concerts. Metaverse tokens have been on the rise. There are cases where players can build, own, and monetise their time and in-game achievements. The paradigm of play-to-earn is set to grow multi-fold in the coming years. Metaverse is growing strong. Figure 2 shows a glimpse at the current ecosystem participants.

WEB3 ECONOMY Starting with the NFTs, to playing and attending concerts in virtual worlds, the Web3 ecosystem is expanding in new ways and models for creators and com-

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TECHNOLOGY AND INNOVATION Successful Business Magazine

FIGURE 2. METAVERSE ECOSYSTEM DIAGRAM financial ecosystem built on blockchain applications. They consist of a combination of traditional financial products and financial concepts, as known from the banking sector, integrated with blockchain technology. And this is only the beginning. The distributed nature, the no need for a third trusted party and the security the technology provides via smart contracts, is creating the perfect environment to build new and more complex financial products. DeFi platforms allow to lend or borrow funds from others, speculate on price movements on a range of assets, insure against risk and even earn interest in several mechanisms such as yield farming and liquidity mining. Although it may seem that DeFi started in 2020, it has been around since early 2018. According to Coinmetrics, a provider of crypto financial intelligence, DeFi’s significant rise began in July 2020, and continued until May 2021, where the market cap peaked close to $95 billion (Figure 3). We are currently at early stages of the future financial industry, where the regulation of such products is still minimum and DeFi entitle high level of risk, therefore should be used with caution.

AND WHAT ABOUT CYPRUS?

Source: Newzoo's Global Games Market Report / Into the Metaverse trend report

THE PARADIGM OF PLAY-TO-EARN IS SET TO GROW MULTI-FOLD IN THE COMING YEARS. METAVERSE IS GROWING STRONG

munities to monetise. When referring to Web3, it is often noticeable that cryptocurrencies are part of the conversation. That is because Web3 applications either run on blockchains, decentralised networks, or numerous peer-to-peer computers. These applications are often referred to as dApps or decentralised applications. The growth of dApps has greatly started to alter the financial industry. Decentralised Finance or simply, DeFi, is the

SUCCESSFUL BUSINESS | JANUARY-MARCH 2022

The Republic of Cyprus to be in line with the European and global trends and technological advancements, is adopting innovative practices and procedures. The ‘Distributed Ledger Technologies (Blockchain) – a National Strategy for Cyprus’ is paving the route and contributes towards making the island in the Mediterranean a regional hub for technology companies. As early as now, we have seen digital transformation in the healthcare sector. A blockchain enabled medical data management platform has been implemented and used by a Cyprus hospital, allowing patients to identify themselves automatically at the Emergency Room registration desk, check their queue on mobile phone, and safely manage their own medical records.

TECHNOLOGY AND INNOVATION MOVING FORWARD: NFTS, META, WEB3, AND CYPRUS DTL STRATEGY

FIGURE 3. DEFI MARKET CAP 90B 80B 70B 60B

30B 20B 10B 0 May 2020 Jul 2020 Sep 2020 Nov 2020 Jan 2021 Mar 2021 May 2021 Jul 2021 Sep 2021 Nov 2021

Real estate industry has already been disrupted as well. A US-based company specialising in enterprise cryptocurrency blockchain software, announced that they will tokenise real estate deals in Cyprus in the form of NFTs. The tokens issued will be backed by actual, physical real estate and the goal is to access the future value of the real estate deal once the project is constructed. This method will allow real estate developers to raise capital at better terms and allow the token holders to raise appraisals and earn income. I strongly believe that Cyprus is an emerging technology hub in the region. The implementation of the National Blockchain Strategy, in combination with several other incentives already offered, create a unique opportunity to tech companies. What would help accelerate the development of this technology hub is the design and construction of a Tech Valley. A campus where tech companies would occupy physical spaces, founders and teams will be able to have access to mentorship, trainings, education. To create a valley of companies and likeminded entrepreneurs and of course to attract investment capital. Cyprus is proactively developing modern legislation and policies, aiming

Source: Coin Metrics Network Data Charts

50B 40B

to attract state-of-the-art cryptocurrency companies and talents across all the board of professions. At Quonota Investments, we believe that Cyprus has enormous potential to become a stronghold hub for Blockchain Technology businesses, by creating an ecosystem for investors, developers, and entrepreneurs alike. With the newly implemented crypto legislation this is becoming a reality and now it is the right time to become part of it by relocating to Cyprus.

DECENTRALISED FINANCE OR SIMPLY, DeFi, IS THE FINANCIAL ECOSYSTEM THAT COMBINES TRADITIONAL FINANCIAL PRODUCTS WITH FINANCIAL CONCEPTS INTEGRATED WITH BLOCKCHAIN TECHNOLOGY

Quonota Investments, a family office and investment firm, is based in Limassol, the tech city of the island, with a blend of historic and ultra-modern architecture and tradition. The firm is an active investor in the digital assets industry and avid supporter of blockchain technology. We invest in the bold, the brave and exceptional – the defining ideas of today and tomorrow. We help with money, mentorship, and shared learning from people who have walked in these shoes before. Our goal is to become an epicentre for innovation investing, with the best connected networks to help support our portfolio companies. 18 Maximos Michaelides St., Tower II, Maximos Plaza, Limassol 3106 Cyprus +357 25 731880 info@quonota.com www.quonota.com

JANUARY-MARCH 2022 | SUCCESSFUL BUSINESS

TECHNOLOGY AND INNOVATION Successful Business Magazine

BLOCKCHAIN AND CRYPTO IN SIMPLE WORDS

To make understanding of blockchain as easy as possible for the readers, the Successful Business Magazine team has sifted through many relevant materials. The resulting summary presented below includes information that is essential to know about blockchain. At the end of this article there is a list of the best online resources that the interested reader may refer to for more details.

BLOCKCHAIN IN BRIEF Blockchain is a technology that allows to record information in such a way that makes it difficult or impossible to change, hack, or cheat the system. A blockchain is essentially a digital ledger of transactions that is duplicated and distributed across the entire network of computer systems on the block-

chain. Each block in the chain contains a number of transactions, and every time a new transaction occurs on the blockchain, a record of that transaction is added to every participant’s ledger. The decentralised database managed by multiple participants is known as Distributed Ledger Technology (DLT). Blockchain is a type of DLT in which transactions are recorded with an immutable cryptographic signature called a hash. This means if one block in one chain was changed, it would be immediately apparent it had been tampered with. If hackers wanted to corrupt a blockchain system, they would have to change every block in the chain, across all of the distributed versions of the chain.

THE PROPERTIES OF DISTRIBUTED LEDGER TECHNOLOGY (DLT) PROGRAMMABLE

DISTRIBUTED

A blockchain is programmable (i.e. Smart Contracts)

All network participants have a copy of the ledger for complete transparency

IMMUTABLE

SECURE

All validated records are irreversible and cannot be changed

All records are individually encrypted

TIME-STAMPED

ANONYMOUS

The identity of the participants is either anonymous or pseudonymous

UNANIMOUS

All network participants agree to the validity of each of the records

SUCCESSFUL BUSINESS | JANUARY-MARCH 2022

A transaction timestamp is recorded on a block

Source: Euromoney Learning 2020

HOW BLOCKCHAIN TECHNOLOGY WORKS The advancements of blockchain are still young and have the potential to be revolutionary in the future. In few words, blockchain is a combination of three leading technologies: 1. Cryptographic keys 2. A peer-to-peer network containing a shared ledger 3. A means of computing, to store the transactions and records of the network. Cryptography keys consist of two keys – Private key and Public key. These keys help in performing successful transactions between two parties. Each individual has these two keys, which they use to produce a secure digital identity reference. This secured identity is the most important aspect of blockchain technology. In the world of cryptocurrency, this identity is referred to as ‘digital signature’ and is used for authorising and controlling transactions. The digital signature is merged with the peer-to-peer network; a large number of individuals who act as authorities use the digital signature to reach a consensus on transactions, among other issues. When they authorise a deal, it is certified by a mathematical verification, which results in a successful secured transaction between the two networkconnected parties. To sum it up, blockchain users employ cryptography keys to perform different types of digital interactions over the peer-to-peer network.

PRIVATE BLOCKCHAIN NETWORKS

private businesses and organisations. Companies can use private blockchains to customise their accessibility and authorisation preferences, parameters to the network, and other important security options. Only one authority manages a private blockchain network.

PUBLIC BLOCKCHAIN NETWORKS Bitcoin and other cryptocurrencies originated from public blockchains, which also played a role in popularising DLT. Public blockchains also help eliminate certain challenges and issues, such as security flaws and centralisation. With DLT, data is distributed across a peer-to-peer network rather than being stored in a single location. A consensus algorithm is used for verifying information authenticity; proof of stake (PoS) and proof of work (PoW) are two frequently used consensus methods.

THE ADVANCEMENTS OF BLOCKCHAIN ARE STILL YOUNG AND HAVE THE POTENTIAL TO BE REVOLUTIONARY IN THE FUTURE

PERMISSIONED BLOCKCHAIN NETWORKS Also sometimes known as hybrid blockchains, permissioned blockchain networks are private blockchains that allow special access for authorised individuals. Organisations typically set up these types of blockchains to get the best of both worlds, and it enables better structure when assigning who can participate in the network and in what transactions.

Private blockchains operate on closed networks, and tend to work well for

JANUARY-MARCH 2022 | SUCCESSFUL BUSINESS

TECHNOLOGY AND INNOVATION Successful Business Magazine

A LOOK AT BLOCKCHAIN TECHNOLOGY What is it?

A blockchain is a decentralised ledger of facts, replicated across several computers assembled in a peer-to-peer network. Facts can be anything from monetary transactions to content signature. Members of the network are anonymous individuals called nodes. All communication inside the network takes advantage of cryptography to securely identify the sender and the receiver. When a node wants to add a fact to the ledger, a consensus forms in the network to determine where this fact should appear in the ledger; this consensus is called a block. Using this technology, participants can confirm transactions without the need for the central certifying authority.

How it works: 1

3 A

Someone requests a transaction (adds a fact)

The network validates the transaction and the user status using known algorithms

The new block is then added to the existing blockchain in a way that is permanent and unalterable

6 A

The requested transaction is broadcasted to a P2P network consisting of nodes

Once validated, the transaction is combined with other transactions forming a new block of data for the ledger

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The transaction is complete

TECHNOLOGY AND INNOVATION BLOCKCHAIN AND CRYPTO IN SIMPLE WORDS

A verified transaction can involve

CRYPTOCURRENCY

CONTRACTS

RECORDS

OTHER INFORMATION

CRYPTOCURRENCY Cryptocurrency is a medium of exchange, created and stored electronically on the blockchain, using encryption techniques to control a creation of a monetary units and to verify the transfer of funds. Bitcoin is the best known example.

Has no intrinsic value in that it is not redeemable for another commodity such as gold

Benefits

Its supply is not determined by a central bank and the network is completely decentralised

Has no physical form and exists only on the network

BLOCKCHAIN

Unknowns

Increased transparency

Complex technology

Accurate tracking

Regulatory implications

Permanent ledger

Implementation challenges

Cost reduction

Competing platforms

Potential applications Automotive Consumers could use the blockchain to manage fractional ownership in autonomous cars

Faster, cheaper settlements could shave millions of dollars from transaction costs while improving transparency

Using a blockchain code, constituents could cast votes via smartphone, tablet or computer, resulting in immediately

verifiable results

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BLOCKCHAIN AND CRYPTOCURRENCIES Blockchains such as Bitcoin and Ethereum are constantly and continually growing as blocks are being added to the chain, which significantly adds to the security of the ledger. There have been many attempts to create digital money in the past, but they have always failed. The prevailing issue is trust. If someone creates a new currency called the X dollar, how can we trust that they won't give themselves a million X dollars, or steal your X dollars for themselves? Bitcoin was designed to solve this problem by using a specific type of database called a blockchain. Most normal databases, such as an SQL database, have someone in charge who can change the entries (e.g. giving themselves a million X dollars). Blockchain is different because nobody is in charge; it’s run by the people who use it. What’s more, bitcoins can’t be faked, hacked, or double spent – so people that own this money can trust that it has some value.

HOW DOES CRYPTOCURRENCY WORK? A cryptocurrency is a medium of exchange that is digital, encrypted, and decentralised. Τhere is no central authority that manages and maintains the value of a cryptocurrency. Instead, these tasks are broadly distributed among a cryptocurrency’s users via the internet. Crypto can be used to buy regular goods and services, although most people invest in cryptocurrencies as they would in other assets, like stocks or precious metals.

PROOF OF WORK VS PROOF OF STAKE Proof of work and proof of stake are two different validation techniques used

to verify transactions before they’re added to a blockchain that reward verifiers with more cryptocurrency. Cryptocurrencies typically use either proof of work or proof of stake to verify transactions.

HISTORY OF BLOCKCHAIN Satoshi Nakamoto, whose real identity remains unknown to date, first introduced the concept of blockchains in 2008. The design continued to improve and evolve, with Nakamoto using a Hashcash-like method. It eventually became a primary component of bitcoin, a popular form of cryptocurrency, where it serves as a public ledger for all network transactions. Bitcoin blockchain file sizes, which contained all transactions and records on the network, continued to grow substantially. By August 2014, it had reached 20 gigabytes, and eventually exceeded 200 gigabytes by early 2020.

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Proof of Work Each participating computer, often referred to as a ‘miner’, solves a mathematical puzzle that helps verify a group of transactions – referred to as a block – then adds them to the blockchain leger. The first computer to do so successfully is rewarded with a small amount of cryptocurrency for its efforts. This race to solve blockchain puzzles can require an intense amount of computer power and electricity. In practice, that means the miners might barely break even with the crypto they receive for validating transactions, after considering the costs of power and computing resources. Proof of Stake To reduce the amount of power necessary to check transactions, some cryptocurrencies use a proof of stake verification method. With proof of stake, the number of transactions each person can verify is limited by the amount of cryptocurrency they’re willing to ‘stake’, or temporarily lock up in a communal safe, for the chance to participate in the process. Each person who stakes crypto is eligible to verify transactions, but the odds you’ll be chosen to do so increase with the amount you front. Proof of stake removes energy-intensive equation solving; it’s much more efficient than proof of work, allowing for faster verification time for transactions. If a stake owner (sometimes called a validator) is chosen to validate a new group of transactions, they’ll be rewarded with cryptocurrency, potentially in the amount of aggregate transaction fees from the block of transactions.

TECHNOLOGY AND INNOVATION BLOCKCHAIN AND CRYPTO IN SIMPLE WORDS

THE PROS AND CONS OF BLOCKCHAIN Like all forms of technology, blockchain has several advantages and disadvantages to consider.

ADVANTAGES One major advantage of blockchains is the level of security it can provide, and this also means that blockchains can protect and secure sensitive data from online transactions. For anyone looking for speedy and convenient transactions, blockchain technology offers this as well. In fact, it only takes a few minutes, whereas other transaction methods can take several days to complete. There is also no third-party interference from financial institutions or government organisations, which many users look at as an advantage.

DISADVANTAGES Blockchain and cryptography involves the use of public and private keys, and reportedly, there have been problems with private keys. If a user loses their private key, they face numerous challenges, making this one disadvantage of blockchains. Another disadvantage is the scalability restrictions, as the number of transactions per node is limited. Because of this, it can take several hours to finish multiple transactions and other tasks. It can also be difficult to change or add information after it is recorded, which is another significant disadvantage of blockchain.

IMPLICATIONS OF BLOCKCHAIN TECHNOLOGY Blockchain technology has made a great impact on society, including: World Economy. Bitcoin, blockchain’s prime application and the whole reason the technology was developed in the first place, has helped many people through financial services such as digital wallets. It has provided microloans and allowed micropayments to people in less than ideal economic circumstances, thereby introducing new life in the world economy. Concept of Trust. The next major impact is in the concept of Trust, especially within the sphere of international transactions. Previously, lawyers were

hired to bridge the trust gap between two different parties, but it consumed extra time and money. The introduction of cryptocurrency has radically changed the trust equation. Many organisations are located in areas where resources are scarce, and corruption is widespread. In such cases, blockchain renders a significant advantage to these affected people and organisations, allowing them to escape the tricks of unreliable third-party intermediaries. Internet of Things. The new reality of the Internet of Things (IoT) is already teeming with smart devices that turn on your washing machines; drive your cars; navigate your ships; organise trash pick-up; manage traffic safety in your community – you name it! This is where blockchain comes in. In all of these cases (and more), leveraging blockchain technology by creating Smart Contracts will enable any organisation to both improve operations and keep more accurate records. Verified Payments. Blockchain technology enables a decentralised peer-to-peer network for organisations or apps like Airbnb and Uber. It allows people to pay for things like toll fees, parking, etc. Sensitive Data. Blockchain technology can be used as a secure platform for the healthcare industry for the purposes of storing sensitive patient data. Health-related organisations can create a centralised database with the technology and share the information with only the appropriately authorised people. Sources: www.simplilearn.com; www.ibm.com; www.businessinsider.com; www.nerdwallet.com; www.forbes.com; www.investopedia.com.

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TECHNOLOGY AND INNOVATION Successful Business Magazine

DELOITTE’S 2021 GLOBAL BLOCKCHAIN SURVEY RESULTS Today digital assets are affecting the entire financial market. Will they create opportunities for economic growth? How will financial services industry models change? Is the regulatory structure over financial services prepared for this change? Deloitte’s 2021 Global Blockchain Survey provides a clearer view at current and future expectations for the global financial services industry (FSI). The survey focuses on respondents from the FSI and FSI Pioneers – respondents, whose organisations have already applied blockchain solutions and/or integrated digital assets into their business activities. More organisations realise that adopting blockchain and digital assets becomes necessary for their business models. According to the survey’s results, more than three quarters of FSI respondents

strongly or somewhat agree that their organisation will lose an opportunity for competitive advantage if they fail to adopt blockchain and digital assets. The shift to digital assets is fundamentally changing banking. Banks need to rethink their business models around the payments since cross-border transactions can be performed outside the traditional banking system. 43% of FSI respondents say that new payment options represent a ‘very important’ role for digital assets in their organisations. Among FSI Pioneers that figure jumps to 63%. 76% of the survey respondents and 85% of FSI Pioneers believe that digital assets will help significantly or moderately reduce risks for organisations

How do financial executives view blockchain and digital assets? FSI overall respondents and, especially, FSI Pioneers express stronger convictions about the critical importance of blockchain and digital assets than overall respondents

What is your level of agreement or disagreement with each of the following statements? Blockchain technology is broadly scalable and has achieved mainstream adoption Our executive team believes there is a compelling business case for the use of blockchain, digital assets, and/or cryptocurrencies within my organization or project Our business partners, suppliers, customers, and/or competitors are discussing or working on blockchain, digital assets, and/or cryptocurrencies in context to solutions or strategies My organisation will lose an opportunity for competitive advantage if we don't adopt blockchain and digital assets Our industry will see new revenue streams from blockchain, digital assets, and/or cryptocurrency solutions

SUCCESSFUL BUSINESS | JANUARY-MARCH 2022

Overall FSI overall FSI Pioneers

TECHNOLOGY AND INNOVATION DELOITTE’S 2021 GLOBAL BLOCKCHAIN SURVEY RESULTS

or projects. But this optimism is also tempered by caution. 71% of overall survey respondents identified cybersecurity among the biggest obstacles to acceptance of digital assets. 67% of FSI Pioneers agreed which means that even those who are already implementing digital assets and believe in their future have serious security concerns. Around 70% of overall survey respondents identified data security regulation in the greatest need of modification (vs 63% of FSI Pioneers). The Deloitte’s Global Blockchain Survey shows that respondents expect to observe significant positive impact on their organisations and projects from a variety of digital asset types: • Stablecoins or central bank digital currencies: overall survey 42%; FSI overall 43%; FSI Pioneers 53% • Algorithm-driven stablecoins: overall survey 38%, FSI overall 40%, FSI Pioneers 59% • Enterprise-controlled coins: overall survey 33%, FSI overall 33%, FSI Pioneers 43%. This thinking creates anxiety about how the industry can adjust traditional processes, products, and services to effectively meet their customers’ future needs. An impressive 97% of FSI Pioneers see blockchain and digital assets as another way to gain competitive advantage. The future is happening now. But it will depend on the industry players and on their reactions. What the industry does now will shape financial services, the nature of money, and the nature of financial economic activity for the next decade. Participation in the age of digital assets is not an option. Leaders need to decide how and when their organisations should start using digital assets to their great advantage. Deloitte conducted its 2021 Global Blockchain Survey in 10 locations: United States, United Kingdom, Germany, China Mainland, Japan, UAE, Hong Kong SAR, Singapore, Brazil, South Africa. In total, 1,280 senior executives and practitioners took part in it.

The future of digital assets FSI Pioneers are in near unanimity about the transformative role that digital assets will play in the near future I believe that digital assets will be very or somewhat important to my industry in the next 24 months I strongly or somewhat believe that digital assets will be a strong alternative to or replacement for fiat currencies in the next 5 to 10 years

Overall

FSI overall

FSI Pioneers

The role of digital assets in future Custody and new payment channels stand apart among potential digital asset use cases

What role will digital assets have in your organisation or project? Custody of digital assets

New payment channels or types Diversifying investments/portfolios Access to decentralised finance platforms Tokenisation of assets Enabling intercompany or bank transactions Automation of contracts/IP rights

Enabling end-user transactions Virtual representation of financial instruments or products Treasury/balance sheet management Enabling loyalty solutions

The full survey can be accessed at www2.deloitte.com

JANUARY-MARCH 2022 | SUCCESSFUL BUSINESS

TECHNOLOGY AND INNOVATION Successful Business Magazine

CYPRUS: PERFECT BASE FOR DIGITAL NOMADS Living a nomadic lifestyle became a trend in recent years. Paradoxically, the global pandemic helped promote the concept. Last two years proved that many of us could perform our job remotely with the help of technology.

Jowita Jablonska Founder of CDX Trust – Nomads Club jj@cdxtruct.com

More and more people want to be location independent – either while working remotely for an employer or by setting up their own business activity. However, the nomadic lifestyle can bring up issues with a residency status, specifically with tax residency. Many travellers do not necessarily think about this in the first place and sometimes totally ignore their tax situation. Even if one decides to do a Tour Around the World, they should think in advance – where and how to declare the revenue. For some, this will be a country where they eventually return to. But those who do not have a permanent home and do not necessarily want to have one, should be very cautious about their tax residency strategy. Similarly, the same applies to the travelling entrepreneurs; they need to make sure that the residency of their business is well-established. Fortunately, more and more digital nomads are aware of the problems that may arise due to the changes of location and prefer to carefully choose one country as a base and set up the tax residency there. Digital nomads are privileged since they have the luxury to choose their tax residency country and legally save on taxes. At the same time, many locationindependent expats realised that they don’t have to be on a constant tour to benefit from а nomadic lifestyle. The concept of slow travelling becomes even more popular when we are facing travelling restrictions.

SUCCESSFUL BUSINESS | JANUARY-MARCH 2022

CYPRUS BENEFITS For any type of nomads – those ‘on the go’ or those who prefer to stay in a place for longer – Cyprus is the ideal place to be. Most importantly, in 2017, the government introduced very attractive residency rules – one of the best in the world. One can become a Cyprus tax resident when staying in the territory of Cyprus for at least 60 days in a tax year. The 60-days rule can be used under the condition that this person does not spend more than a sum of 183 days in any other jurisdiction within a tax year and is not a resident (for tax purposes) of another jurisdiction within the same tax year. A personal tax residency in Cyprus can be favourably combined with a business incorporation on the island since one of the conditions to acquire the residency permit is to be employed or to carry on a business. Tax residents in Cyprus are taxed on their worldwide income; however, certain exceptions apply. A Cyprus tax resident but non-domiciled in Cyprus is exempt from taxation on his worldwide dividend and ‘passive’ interest income. When becoming a tax resident of Cyprus, the expats can benefit from no taxation of dividends and interest for non-domiciled tax residents – for 17 years of the residency (exemption from Special Defence Contribution which is a local withholding tax on passive income for domiciled tax residents).

TECHNOLOGY AND INNOVATION CYPRUS: PERFECT BASE FOR DIGITAL NOMADS

Overall, Cyprus is a great jurisdiction to run a business and is often chosen by entrepreneurs for company struc turing and tax planning. There are no capital gains tax on sale of securities (selling shares, stocks, various financial instruments) and no withholding tax on dividends, interests, and royalties. Even after the planned increase of the corporate tax rate to 15%, Cyprus will be still one of the most competitive countries to incorporate a company. Cyprus offers one of the most favour able Intellectual Property systems. The IP regime, also known as the Patent Box or the Innovation Box, introduced in many countries to stimulate research and development (R&D) activities, results in lower taxes, by taxing profits derived from a licence, sublicence, sale, or transfer of eligible IP assets. Under the regime, 80% of the profit earned from the use of intangible assets can be deducted for tax purposes. The VAT rate is 19% in the case of services rendered to entities in Cyprus or B2C. There is no VAT for the provision

of services to entities located outside the EU and when selling B2B services between companies registered for VAT in the EU. To continue with benefits of becoming a tax resident in Cyprus, we need to mention the 0% rate of the Personal Income Tax for income below €19,500 per year (once reached, it becomes 20-35% depending on the level of income). Another great incentive is the expatriate tax relief for employment in Cyprus, which is supposed to be extended every five years. In practice, it is granting the application of the 20% or €8,550 (whichever is the lower) tax exemption on remuneration from employment which is exercised in Cyprus by an individual who was resident outside

THE NOMADIC LIFESTYLE CAN BRING UP ISSUES WITH A RESIDENCY STATUS, SPECIFICALLY WITH THE TAX RESIDENCY JANUARY-MARCH 2022 | SUCCESSFUL BUSINESS

TECHNOLOGY AND INNOVATION Successful Business Magazine

A PERSONAL TAX RESIDENCY IN CYPRUS CAN BE FAVOURABLY COMBINED WITH A BUSINESS INCORPORATION ON THE ISLAND the Republic in the tax year prior to the commencement of his employment on the island. For instance, under the current framework, as of January 1st, 2020, an individual whose employment in the Republic commences up to the year 2025, has the right to claim the relevant tax exemption for a period of five years (i.e. up to the year 2030 inclusive).

WHAT FUTURE BRINGS When thinking of Cyprus, we should also appreciate the high-potential dynamic growing economy and investment opportunities. Recently the government decided to promote these qualities and to open for foreign capital. Cyprus aims to welcome more expats, but not only from the EU, which is a gesture towards the Russian community. Without a doubt, the current system provides the ease of residency permissions primarily to citizens of the EU countries. The expats from outside the

PREREQUISITES FOR CYPRUS DIGITAL NOMAD VISA Verified monthly income from abroad: min €3,500; +20% for the spouse; +15% for every child Medical insurance Clean criminal record certificate from the country of residence

SUCCESSFUL BUSINESS | JANUARY-MARCH 2022

EU zone usually struggle with legalising their residency. The government introduced the socalled ‘Action Plan’ which will facilitate hiring of employees and offer tax incentives. Some of the proposals will be implemented as from January 2022, however tax relief and new rules for naturalisation will first need relevant legislation. The package is addressed to expats in general, but primary to all foreign companies operating in Cyprus or wishing to establish presence in the country, as well as for Cyprus companies in specific domains related to hi-tech/ innovation, research and development, biogenetics and biotechnology, and shipping.

WHAT ABOUT CRYPTOS? The Action Plan is a very good initiative and will certainly attract more foreign business. It is a shame though, that the matter of cryptocurrency – being a current global issue and directly connected to digitalisation, is not even mentioned in the Action Plan. In Cyprus we are still waiting for a relevant legislation. The Tax Office in Cyprus is not willing to issue any guidance or interpretations in this matter. For now, since every Cyprus company needs to submit its financial statements, the role of auditors in qualification of such profits is significant. This means that the interim taxwise solution for now would be keeping the cryptocurrency in a separate entity, like a company. In the current situation, the taxation of profits from cryptos on a corporate level seems to be a less risky option than declaring crypto profits as a physical person. The only body that recently referred to the subject was the Cyprus Securities and Exchange Commission – when updating its policy of regulation of cryptoassets. The CySEC document defined specific requirements for companies that seek to be included in the official register of service providers related to cryptocurrencies. At the same time, it describes cryptoassets, but… only those

TECHNOLOGY AND INNOVATION CYPRUS: PERFECT BASE FOR DIGITAL NOMADS

that are regulated… which, of course, is not the case yet. Depending on their structure, cryptoassets can be qualified as financial instruments. Also, without being an official means of payment, they can qualify as ‘electronic money’. Time will show how tax authorities in Cyprus will classify it. Cyprus is an attractive destination for both business and individuals. Compared to other EU countries, it offers a unique work-life balance blended with a high-quality Mediterranean lifestyle. In recent years Cyprus has become an international business centre, where

IN THE CURRENT SITUATION, THE TAXATION OF PROFITS FROM CRYPTOS ON CORPORATE LEVEL SEEMS TO BE LESS RISKY OPTION THAN DECLARING CRYPTO PROFITS AS A PHYSICAL PERSON many expats found their place to live and digital nomads a great base to stay. With such great potential, it seems to be on the right course for the next decades.

CYPRUS ’ACTION PLAN’ HIGHLIGHTS New policy for employing non-EU country nationals Issuing of temporary residence and employment permits in Cyprus for high-skilled third-country employees, with a minimum gross monthly salary of €2,500, while a university degree, title, equivalent qualifications, or certificates of relevant experience are also needed. Family reunification of third-country nationals Family members of non-EU employees, who are employed under the new residence permit provisions, will also have immediate and free access to Cyprus labour market. Digital nomad visas Initially, with a limit of 100 beneficiaries. Digital Nomad Visa is for third-country nationals who wish to live in Cyprus but work remotely for companies operating abroad. The visa will be granted for a period of 12 months, with the right to renew it for another two years. The amount of sufficient resources is set at €3,500 per month. Application for Cypriot citizenship Right to submit an application for naturalisation after 5 years of residence and work in the Republic of Cyprus (instead of 7), or after 4 years if they have a recognised certificate of very good knowledge of the Greek language. Business Facilitation In areas of hi-tech/innovation, research and development, shipping, biogenetics and biotechnology.

Ease of establishing and administering companies shall be improved (company registration, name approval, registration to social insurance, registration to VAT). Extensions of expatriate reliefs • Current expat employees will be able to extend the benefit to 17 years. • Income tax exemption of 50% to new residentsemployees with income between €55,000 and €100,000 for the remaining period of 17 years. These tax incentives also apply to Cypriots who have lived abroad for at least ten years and wish to repatriate to the Republic. One could say that this proposal seems to be a little excessive. According to the Plan, tax exemptions addressed to foreign high skilled employees in Cyprus is to be extended for a period of 17 years. It is the same period as current benefit for non-domiciled tax residents. When it makes sense to establish such long period for incentives related to domiciliation, it is not so common to introduce such extensive relief related to the employment. For this reason, we can never take for granted that such benefit would stay within the system for longer. Tax incentives for R&D expenses and for innovative investments • Granting an increased discount on research and development expenses (e.g. by 20%) • Possibility of extending the tax exemption to 50% for investment in certified innovative companies and by corporate investors.

JANUARY-MARCH 2022 | SUCCESSFUL BUSINESS

Successful Business Magazine

ECONOMIC OUTLOOKS AND FORECASTS

2022

The Successful Business Magazine offers a summary of several outlooks and forecasts to help readers get clearer understanding of what experts and economists from various world-known organisations expect from the year 2022.

Sources: www.live.moodys.io; www.goldmansachs.com; www.bloomberg.com; www.morganstanley.com; www.fitchratings.com; www.privatebank.jpmorgan.com; www.spglobal.com

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TRENDS AND FORECASTS www.cyprusrussianbusiness.com

CREDIT SUISSE: MAJOR ECONOMIES, CURRENCIES, ASSET CLASSES UNITED STATES. Credit Suisse

expects the US to post real GDP growth of 3.8% in 2022, with a halting services rebound and ongoing supply chain problems complicating the final stages of the pandemic recovery. Inflation is expected to slow to 3.9% after an extreme spike in 2021. The USD is expected to benefit from a rate advantage over other developed market currencies as the Federal Reserve withdraws pandemic stimulus.

EUROZONE. The Eurozone is expect-

ed to grow by 4.2% in 2022, as the economy eventually overcomes ongoing supply chain issues that have led to a sharp rise in inflation. The European Central Bank (ECB) should start paring back its asset purchase programmes in 2022. We expect the EUR to start 2022 rather softly against the USD, but stabilise and recover later in the year, contingent on the ECB’s policy actions.

SWITZERLAND. The Swiss economy

should post solid growth in the coming months, while a decline in the unemployment rate should support consumer spending. Swiss GDP is forecast to grow 2.5% in 2022. As the Swiss National Bank is likely to continue to intervene in the FX market if needed, the CHF should not appreciate meaningfully against the EUR.

CHINA. After a strong growth recovery,

China's experienced a renewed slowdown due to problems in its real estate sector and regulatory changes and policy reform, which are expected to continue into 2022, potentially weighing on growth. China’s economy is forecast to grow at 6.1% in 2022 and the CNY to hold stable or soften somewhat in the first half of 2022.

JAPAN. The Japanese economy is

expected to grow by 1.7%, as the new government is likely to provide further stimulus to support the economic recovery. The JPY is expected to depreciate against the USD in 2022.

EQUITIES are forecast to provide sin-

gle-digit returns in 2022, more moderate than in 2021, while continuing to offer an attractive risk premium over bonds. Equity segments that lagged the pandemic recovery should emerge as bright spots, as should industries that benefit from secular growth trends.

GOVERNMENT BOND YIELDS will likely deliver negative returns in 2022. In credit, low spreads in investment grade and high yield will barely compensate for the risks associated with higher yields. Credit Suisse favours Eurozone inflation-linked bonds and prefers senior loans.

DEMAND FOR COMMODITIES is set to remain supportive in 2022 given expectations for continued aboveaverage global industrial production growth and restocking needs. The price of carbon will stay a key topic, while gold may be vulnerable as policy normalisation begins.

IN ALTERNATIVE INVESTMENTS,

real estate should continue to benefit from the still low interest rate environment, as well as the continuing economic recovery. The economic backdrop also remains supportive for private markets, while hedge funds should deliver modest returns close to the historical average.

JANUARY-MARCH 2022 | SUCCESSFUL BUSINESS

TRENDS AND FORECASTS Successful Business Magazine

MOODY’S: WORLD IN TRANSITION RESHAPED ECONOMIES. The

POLICY SHIFTS. Policymakers will

DEBT SUSTAINABILITY. Debt

PATH TO NET ZERO. Policies to meet

NEW TECHNOLOGIES. Techno-

INEQUALITY & SOCIAL RISK.

global economic recovery will solidify as pandemic effects lessen and businesses and consumers adapt, but prospects will diverge across regions and sectors. levels have climbed to unprecedented highs, which will create repayment risks where growth and earnings prospects weaken or liquidity wanes. logical advances, from blockchain to electric vehicles, will offer competitive advantages to some entities and present threats to others; cybersecurity risks will continue to grow.

scale back fiscal and monetary support to varying degrees; domestic politics, geopolitical risks and regulatory actions will set credit context. net-zero carbon emission commitments will heighten credit risk and raise the cost of capital for carbon-intensive sectors; disclosure around climate issues will be in focus. COVID-19 has exacerbated disparities in employment, incomes and healthcare access, which have the potential to weaken social cohesion and diminish economic progress.

GOLDMAN SACHS: LONG ROAD TO HIGHER RATES GROWTH. Although the fastest pace

of recovery now lies behind us, strong global growth is expected in coming quarters, thanks to continued medical improvements, a consumption boost from pent-up saving, and inventory rebuilding. For 2022 as a whole, global GDP is likely to rise 4,5%, more than 1pp above potential.

DEVELOPED VS EMERGING MARKETS. The major developed

market economies should grow rapidly through midyear and then moderate gradually as the near-term impulses wane. In emerging markets, the forecast is comparatively sluggish performance in China, where the property market is likely to soften further and macro policy looks set to ease only modestly, and in Brazil, where financial conditions have tightened sharply and a potentially messy election looms. By contrast, there is more optimism on India because of significant catch-up potential and on

SUCCESSFUL BUSINESS | JANUARY-MARCH 2022

Russia because of a boost from the oil and gas sector.

INFLATION. The biggest surprise of

2021 has been the goods-led inflation surge. This recently prompted the forecast for Fed liftoff by a full year to July 2022. Subsequently, a funds rate hike is expected every six months, a relatively gradual pace that assumes a normalisation in goods prices and in overall inflation (albeit later and more partial than previously thought).

RATES. By the time Fed hikes get

underway, some advanced economies (including the UK and Canada) should be well into the interest rate normalisation process, and a number of economies in Latin America and Eastern Europe may already be approaching its end. By contrast, the ECB and RBA are still far away from hiking rates, and markets seem to have overshot in their expectation of an imminent hawkish turn.

TRENDS AND FORECASTS www.cyprusrussianbusiness.com

MORGAN STANLEY: GROWTH DESPITE INFLATION INFLATION. The surge in global inflation

has investors fretting about future growth, but Morgan Stanley economists say price surges will subside, making way for 4.7% global GDP growth in 2022. It's impossible to talk about the 2022 global economic outlook without addressing the proverbial elephant in the room: inflation. For decades, significant price growth eluded most major markets. Then, suddenly, a surge in demand coming out of the Covid-19 recession, coupled with lingering supply-chain disruptions and labour shortages, created a perfect storm for price increases. Inflation for developed markets is on track to reach 4.7% at the end of 2021 – not an insignificant number – and in a typical economic cycle, this would be a clear signal for central banks to raise rates and pump the brakes on growth. While inflation dynamics will vary by country as supply chains and labour markets stabilise at different rates, the economics team at Morgan Stanley Research forecasts that inflation in major markets will ‘peak then retreat’ by more than two percentage points over the course of 2022.

GLOBAL GDP. Monetary policy is likely

to tighten but less than investors fear, while strong capital expenditures, improving supply chains, and other normalising forces add up to Morgan Stanley's above-consensus outlook of 4.7% GDP growth for 2022. Global GDP is to reach the pre-Covid path in 3Q23. Broadly speaking, Morgan Stanley economists believe emerging market growth will remain strong in the year ahead with GDP growing 4.9% for all emerging markets, though slow growth in Brazil (0.5%) and Russia (2.7%) drag down the average. In fact, the outlook is considerably better for Asian emerging markets, with GDP growth in the Asia region (excluding Japan) outperforming at 5.7%. India and Indonesia are rebounding strongly, helped by businessfriendly structural reforms, strong capital investments, and rising vaccination rates.

SUPPLY CHAIN. Globally, supply chain

disruptions are a major driver of recent inflation, and based on surveys and feedback from Morgan Stanley equity analysts, we are now at, or close to, the worst level of supply chain disruption.

EU GROWTH. The European economy is on

track to recover to prepandemic levels by the end of this year and is poised for 4.6% GDP growth in 2022, as a strong labour market supports improving consumer spending. Morgan Stanley economists see inflation in Europe dropping from 4.1% at the end of 2021 to 3.1% by the first quarter of 2022, and eventually dipping below the European Central Bank's target inflation rate of 2%.

CHINA GROWTH. Growth in the world’s

second-largest economy, China, is now at an inflection point. In 2021, withdrawal of policy support and a wide-ranging regulatory tightening across property, carbon emissions, and tech sectors have slowed its expansion. The China Economics team believes growth will recover to 5.5% next year, which is higher than the consensus but significantly lower than China’s recent past. Thereafter, China’s GDP growth will likely slow to 4.8% in 2023 and hover just above 4% for the foreseeable future.

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TRENDS AND FORECASTS Successful Business Magazine

BLOOMBERG: BIGGEST ECONOMIC RISKS OMICRON AND MORE LOCKDOWNS. It’s early for a definite verdict

on the omicron variant of Covid-19. Apparently more contagious than its predecessors, it may prove less deadly too. That would help the world get back to something like pre-pandemic normal – which means spending more money on services. Lockdowns and Covid caution have kept people out of gyms or restaurants, for example, and encouraged them to buy more stuff instead. A rebalancing of spending could boost global growth to 5.1% from the Bloomberg Economics base forecast of 4.7%. But we may not get that lucky. A more contagious and deadly variant would drag on economies. Even a three-month return to the toughest 2021 restrictions – countries like the UK have already moved in that direction – could see 2022 growth slow to 4.2%. In that scenario, demand would be weaker and the world’s supply problems would likely persist, with workers kept out of labour markets and further logistics snarl-ups.

THE THREAT OF INFLATION. At

the start of 2021, the US was forecast to end the year with 2% inflation. Instead it’s close to 7%. In 2022, once again, the consensus expects inflation to end the year close to target levels. Another major miss is possible.

CHINA COULD HIT A GREAT WALL. In the third quarter of 2021, China’s economy ground to a halt. The accumulated weight of the Evergrande real estate slump, repeated Covid lockdowns and energy shortages dragged annualised economic growth down to 0.8% – way below the 6% pace to which the world has become accustomed.

SUCCESSFUL BUSINESS | JANUARY-MARCH 2022

POLITICAL TURMOIL IN EUROPE. Solidarity among leaders who back the European project, and European Central Bank activism to keep government borrowing costs under control, helped Europe weather the Covid crisis. In the year ahead, both could fade. A fight over the Italian presidency in January could upend the fragile coalition in Rome. France heads to the polls in April with President Emmanuel Macron facing challenges from the right. If euro-sceptics gain power in the bloc’s key economies, it could shatter the calm on European bond markets and deprive the ECB of the political support required to respond. Say that sovereign spreads widen by 300 basis points, like they did in last decade’s debt crisis. Bloomberg Economics model shows that could chop more than 4% from economic output by the end of 2022, sending the euro area into recession and reviving concerns about its viability.

FEELING THE BREXIT IMPACT. Negotiations between the UK and EU over the Northern Ireland Protocol – a doomed attempt to square the circle of an open land border and closed customs union – are set to rumble on into 2022. Getting to yes will be tough. What happens if negotiations break down? Based on past Brexit flare-ups, the uncertainty would hit business investment and undermine the pound, boosting inflation and eroding real incomes. In a full-on trade war, tariffs and transportation logjams could push prices even higher.

THE FUTURE OF FISCAL POLICY. Governments spent heavily to support workers and businesses in the pandemic.

TRENDS AND FORECASTS www.cyprusrussianbusiness.com

Many now want to tighten their belts. The pull-back of public spending in 2022 will amount to some 2.5% of global GDP, about five times bigger than austerity measures that slowed recoveries after the 2008 crisis, according to UBS estimates. There are exceptions. Japan’s new government has announced another record stimulus and China’s authorities have signalled a shift to supporting the economy after a long stretch of holding the purse strings tight.

FOOD PRICES AND UNREST. Hunger is a historic driver of social unrest. A combination of Covid effects and bad weather has pushed world food prices near record highs, and could keep them elevated in 2022. The last foodprice shock in 2011 triggered a wave of popular protests, especially in the Middle East. Many countries in the region remain exposed.

POLITICS, GEO- OR LOCAL. Any

escalation between mainland China and Taiwan, from blockade to outright invasion, could draw in other world powers – including the US. A superpower war is the worst case, but scenarios short of that include sanctions that would freeze ties between the world’s two biggest economies, and a collapse in Taiwan’s production of the semiconductors that are crucial to global output of everything from smartphones to cars. Elsewhere, Brazil is scheduled to hold elections in October – against a backdrop of pandemic turbulence and a still-depressed economy. A lot could go wrong, though a win for a candidate promising tighter control of the public purse could bring some relief to the real. In Turkey, the opposition is pushing to bring forward 2023 elections into next year amid a currency slump widely blamed on President Recep Tayyip Erdogan’s unorthodox economic policies.

FITCH: START OF GLOBAL MONETARY POLICY NORMALISATION GDP. Fitch expects world GDP to grow

by 5.7% in 2021, revised down from 6.0% in the September GEO. Supplychain constraints have prevented world industrial production from growing as rapidly as global demand for manufactured consumer durable goods. Downward revisions to 2021 growth forecasts for the US, Japan, and Germany have reflected disruptions to industrial production in recent months related to semiconductor and component shortages. Temporary production shutdowns in the autos sector contributed to weaker-than-anticipated GDP outturns in 3Q21 in all three countries, along with a greater share of demand growth being diverted into higher prices, particularly in the US.

CENTRAL BANKS. The risk of infla-

tion pressures broadening is making central banks nervous. Inflation has become a public concern – now amplified by energy price shocks – and inflation expectations have increased. New Covid-19 variants could adversely affect supply and increase prices, implying risks if central banks delay normalisation.

PANDEMIC SHORTAGES. The

sharp rise in global consumer goods prices since March primarily reflects a huge surge in goods demand, fuelled by stimulus measures, particularly in the US. We expect goods prices to stabilise in 2022 as spending switches back to services, as strong investment boosts goods supply and as fiscal stimulus is unwound.

JANUARY-MARCH 2022 | SUCCESSFUL BUSINESS

TRENDS AND FORECASTS Successful Business Magazine

S&P: RISING INFLATION FEARS OVERSHADOW ROBUST REBOUND PANDEMIC. The global economy is in

the midst of a robust but uneven rebound from the pandemic, with demand growth outrunning supply growth and inflation rising quickly almost everywhere. Covid-19 is still with us, but the economic impact of the virus is weakening, at least for now. The new omicron variant is a wildcard at this juncture.

RATES. On policy, central banks in

key emerging markets are hiking rates, some aggressively; more recently, those in advanced countries are hiking as well, with the Fed and ECB still on hold. GDP growth forecasts are broadly unchanged with the US and eurozone hitting multi-decade highs; China has slowed to below 5% as the government prioritises financial stability. China's growth path remains the key risk for the next few years.

RECORD GROWTH. Macro perfor-

mance has generally exceeded expectations in 2021. The pattern has been driven by a combination of fiscal support, vaccinations, and economic ‘gravity’. These provide a useful lens through which to view the rebound. The first two of these factors tend to favour the advanced economies while the third has a larger influence on emerging markets. The robust recovery has led to concerns about inflation. Europe has been the latest strong performer, posting 9% annualised GDP growth in the third quarter (July to September 2021). This reflected a Grand Re-Opening on the back of a strong vaccination push, fuelled by the release of pent-up demand and rising confidence. This was not unlike the U.S. outturn in the second quarter of the year when vaccinations and confidence rose, although regional surges in Covid-19 and supply bottlenecks pulled down U.S. growth to just 2.1% in the third quarter.

SUCCESSFUL BUSINESS | JANUARY-MARCH 2022

In contrast, Chinese growth has slowed appreciably over the course of the year as fiscal support has been modest, and high intolerance for the virus has curbed mobility and kept services spending weak. However, countries linked to China's investment and durable goods sector have seen steady export demand that has helped to boost growth. Overall, a high degree of unevenness in activity is continuing across both countries and sectors.

INFLATION. The macro focus of the recovery has shifted to inflation. The original thinking was that there would be a modest and temporary rise in inflation in early 2021 as economies re-opened; however, events turned out differently. Price pressures have persisted and broadened more than expected. And the debate is now whether inflation is transitory and will gradually ease, or whether it is persistent and requires an earlier-than-planned policy response. The central banks of Brazil, Chile, Colombia, Mexico, Russia, Poland, and South Africa all hiked rates in their most recent meetings, with more hikes expected into 2022 (Turkey is the only major emerging market country that has lowered interest rates). Monetary authorities in Norway, Korea, and New Zealand have hiked rates in recent meetings, with Australia, England, and Sweden tapering asset purchases. REVISED FORECASTS. S&P’s

baseline GDP forecasts are little changed from the previous forecast round. Global GDP growth has been nudged down to 5.7% in 2021 and 4.2% in 2022 before declining closer to trend of around 3.5% in 2023-2024. Amongst the major economies in 2021, growth in Japan was taken down 40 basis points to 1.9% and Brazil was taken down 30 basis points to 0.8%, both reflecting weaker-than-

TRENDS AND FORECASTS www.cyprusrussianbusiness.com

expected third quarters and slowing prospects ahead. For 2022 Brazil, the UK, the US, and China will all see lower growth (in that rank order), while forecasts are flat to higher in 2023-2024. In line with S&P’s previous reports, the levels of GDP matter in addition to the rate of growth given the size of the Covid shock. Comparing the latest level of output to the last quarter of 2019 (the last pre-pandemic quarter) remains a useful exercise. China regained its pre-pandemic GDP level last year and the US was able to achieve this feat in the second quarter of 2021. The current forecast for the eurozone has that block regaining its pre-pandemic output level in the final quarter of this year. The story is very different for emerging markets. Many countries in this group remain well below end-2019 GDP levels and will suffer a ‘permanent’ output loss. This means that these economies will not get back to their pre-pandemic GDP path; they will be on a lower path. The main cause of this outcome was the lack of fiscal space and spending, which led to the loss of non-replaceable expenditures. India was hit particularly hard, where permanent output losses are on the order of 10% of GDP.

UNITED STATES. Economic activity

has started to pick up pace again after a slowdown in the third quarter. Inflation remains a top risk, with the October consumer price index (CPI) and personal consumption expenditure (PCE) price measures running at 6.2% and 5.0% year on year, respectively, well above the Fed's average target (for the latter) of 2%. In addition, the labour market is struggling to match workers with jobs. Even with the slowdown in growth, S&Ps 5.5% forecast for 2021 growth will be at a 37-year high, before drifting towards potential over 2022-2024.

EUROPE. Following a strong economic

performance in the third quarter with annualised GDP growth of 9.3%, Europe is once again the centre of the pandemic. The unknown is whether consumers will be more hesitant about social con-

tact, and real-time indicators show few signs of self-imposed restrictions so far. Although growth should slow in the final quarter of the year, we see a pickup in 2022. Inflation has risen sharply in recent months, but this has been driven mainly by energy prices, which are levelling off. Longer-term inflation expectations remain well-anchored, and the ECB should be on hold until early 2024 in terms of interest rate policy.

ASIA-PACIFIC. The region continues

to underperform relative to the US and Europe as lockdowns crimp domestic demand and generate an overreliance on exports for growth. On the pandemic, some countries have begun to step away from the ‘zero-tolerance’ approach that has held back growth (China is an exception), adding some needed momentum to activity. Of note, the region has largely escaped the inflation scare seen in other parts of the world, although central banks in Australia, Korea, and New Zealand are withdrawing accommodation. In contrast to their global peers, emerging market central banks are generally on hold. The macro forecasts over 2022-2024 remain broadly unchanged from the previous quarter with China now below 5% growth and India slowing to 6%-6.5%.

MACRO PERFORMANCE HAS GENERALLY EXCEEDED EXPECTATIONS IN 2021. THE PATTERN HAS BEEN DRIVEN BY A COMBINATION OF FISCAL SUPPORT, VACCINATIONS, AND ECONOMIC ‘GRAVITY’.

EMERGING MARKETS. Third-

quarter GDP outturns were mixed but generally weak as supply disruptions held back growth. Brazil and Mexico were particularly hard hit, and Russian output declined slightly while Poland outperformed. Inflation continues to surprise to the upside, in large part due to the recent surge in energy prices, and expectations continue to rise, in many cases surpassing central banks' targets. The market has priced in policy rate increases across a swathe of emerging markets in 2022. Turkey continues to defy market with policy rates cuts. Looking ahead, GDP growth in Latin America has been marked down over S&P’s 2022-2024 (especially for Brazil) while outturns in EM-EMEA and EMAPAC will be mixed.

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TRENDS AND FORECASTS Successful Business Magazine

JP MORGAN: PREPARING FOR VIBRANT CYCLE RECOVERY. Most markets have deliv-

ered stellar returns in 2021 as the global economy continues to heal from the coronavirus pandemic. Yet in recent months, investors have focused on potential risks both to economic growth and market returns. Inflation is complicating central bank policy, supply shortages are hitting economic output, and Covid-19 remains a concern for consumers, businesses, and investors. But over a longer horizon, JP Morgan analysts

MOST MARKETS HAVE DELIVERED STELLAR RETURNS IN 2021 AS THE GLOBAL ECONOMY CONTINUES TO HEAL FROM THE CORONAVIRUS PANDEMIC

SUCCESSFUL BUSINESS | JANUARY-MARCH 2022

see the foundation for a far more vibrant economic environment in the developed world than the sluggish growth and weak productivity that characterised much of the 2010s. This could have important consequences for investors, especially those who are still positioned for a reprise of the previous cycle.

DURABLE EXPANSION. U.S. and

European governments seem committed to avoiding the austerity that contributed to the weak recovery that followed the global financial crisis. Congress and the White House have spent over $4 trillion in response to the pandemic, and, as this is written, Congress is debating trillions more in spending over the next 10 years. In Europe, the EU Recovery

TRENDS AND FORECASTS www.cyprusrussianbusiness.com

Fund will provide ongoing fiscal support through the better part of the decade. The Federal Reserve and European Central Bank look to achieve stronger inflation outcomes with fuller employment. Meanwhile, Chinese policymakers are working to rebalance their economy away from property investments and toward consumer spending and new technology manufacturing. That transition will require a deft touch, and presents potential downside risk to global growth.

IN MANY DEVELOPED ECONOMIES, HOUSEHOLD NET WORTH IS AT ALL-TIME HIGHS, AND EXCESS SAVINGS ARE ELEVATED

BENEFITS. In many developed econo-

CENTRAL BANKS. Central banks

mies, household net worth is at all-time highs, and excess savings are elevated. Strong labour markets and the capacity to take on more debt will likely power strong consumption for years. Corporate earnings and margins have never been healthier, and debt service costs are historically low. Demand needs to be met, inventories rebuilt, and supply chains bolstered. Today's strong earnings should drive tomorrow's investment and spending.

INNOVATION. The megatrends of digital transformation, healthcare innovation and sustainability will continue to drive research and development, investment, and value creation. Digital transformation has only accelerated. Healthcare innovation continues to show the way out of the pandemic, and more frequent and destructive natural disasters are calling growing attention to the need for sustainable investment. Valuations of companies in these three areas have increased, but we see many opportunities for longer-term investors. In their portfolios JP Morgan focuses on the technologies that enable innovation broadly (e.g. semiconductors, artificial intelligence, cybersecurity, and the cloud), while balancing exposures across geographies and investment styles.

from Brazil to New Zealand have raised interest rates in order to combat inflation, but the Federal Reserve and European Central Bank have been patient, so far. A more moderate inflation backdrop should allow both to wait while labour markets make a more complete recovery toward their pre-pandemic trend.

CHINA. Over the past year, policymakers have moved to rein in excesses in many different areas, and investors have felt the fallout. Chinese internet stocks have lost around half of their value, and forced deleveraging in the property sector has caused mediocre growth and market volatility. Looking ahead, there is apparently enough momentum in the global economy to counteract any economic weakness in China, but the simultaneous pursuit of wide-ranging macro-prudential and industrial policies does increase downside risk.

JANUARY-MARCH 2022 | SUCCESSFUL BUSINESS

TRENDS AND FORECASTS Successful Business Magazine

10 PREDICTIONS OF SAXO BANK THAT COULD SHOCK FINANCIAL MARKETS Every year Saxo Bank prepares a forecast of underappreciated events which, if they were to occur, could send shockwaves across financial markets. Here are the bank’s predictions for 2022. The plan to end fossil fuels gets a rain check. Realising the threat of inflation and social unrest, policymakers decide to temporarily relax environmental restrictions. They support fossil fuel investment and encourage producers to ensure adequate and reasonably priced supplies.

Facebook faceplants on youth exodus. The young generation fails to join Meta’s universe of social media platforms. The struggle of Facebook parent company Meta will lead to spinning off its components as separate entities, shattering Zuckerberg’s monopoly.

Metaverse The metaverse is a network of always-on virtual environments in which many people can interact with one another and digital objects while operating virtual representations – or avatars – of themselves. This is how Facebook sees the future of virtual communication. In October 2021, the company officially changed its name to Meta. Its focus is “to bring the metaverse to life and help people connect, find communities and grow businesses” by “moving beyond 2D screens toward immersive experiences like augmented and virtual reality to help build the next evolution in social technology”.

SUCCESSFUL BUSINESS | JANUARY-MARCH 2022

The U.S. mid-term election brings constitutional crisis. The U.S. Presidential elections of 2020 were quite chaotic. Saxo Bank thinks that a similar situation can be created during elections in 2022. Senate and House races come to the end and one or both sides move against certifying the vote, which makes it impossible for the new Congress to form. This eventually will lead to extreme volatility in U.S. assets.

U.S. inflation reaches above 15% on wage-price spiral. The Federal Reserve decides to tighten monetary policy faster in an attempt to fight inflation. As a result, there is extreme volatility in U.S. equity and credit markets.

EU Superfund for climate, energy, and defence announced, to be funded by private pensions. This decision is taken after policymakers realise that it will be impossible to finance the Superfund with higher taxes on incomes or other traditional tax revenues.

Women’s Reddit Army takes on the corporate patriarchy. A group of women traders take action by shorting stocks of selected companies with weak records on gender equality, leading to huge swings in equity prices for these companies.

TRENDS AND FORECASTS 10 PREDICTIONS OF SAXO BANK THAT COULD SHOCK FINANCIAL MARKETS

India joins the Gulf Cooperation Council as a non-voting member. This alliance would see a reduction in India’s energy insecurity. On the other hand, India’s incredibly strong technology platform and deepening capital markets could attract the excess savings generated in the GCC region, through lower friction access.

Spotify disrupted due to NFT-based digital rights platform. NFTs or Non-fungible tokens are unique digital assets, the ownership of which can be established and stored on a digital ledger via blockchain tech. By leveraging NFTs, artists could distribute music directly to listeners without centralised intermediaries taking commission.

New hypersonic tech drives space race and new cold war. In 2022, a massive hypersonic arms race develops among

major militaries. Major financing is provided for companies that build hypersonic tech with space delivery capabilities while companies in the aircraft and ship-building side of the military hardware equation underperform.

The full forecast is available on the official website of Saxo Bank www.home.saxo

Medical breakthrough extends average life expectancy 25 years. Imagine that people will live to an average age of 115. What would this mean for private and government pensions, or even the ability or desire to retire?

Gulf Cooperation Council The Cooperation Council for the Arab States of the Gulf is a regional, intergovernmental political and economic union that was established in 1981 and consists of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE. Its major objectives – yet to be achieved – are a customs union, a common market, and a common currency.

JANUARY-MARCH 2022 | SUCCESSFUL BUSINESS

COMMUNICATIONS AND NETWORKING Successful Business Magazine

CONCEPT

This entity is a private club founded by Natalia Kardash with the aim to provide a platform for her personal business network to meet online or offline on a regular basis. The Club organises and supports events, workshops, presentations, get-togethers, seminars,

70-100

100-120 800-1,000

ECONOMIC DIPLOMACY COUNCIL ONLINE BUSINESS CLUB CYPRUS BUSINESS NETWORK IN LINKEDIN

conferences, etc. The Club members brainstorm innovative ideas and solutions, discuss inventions and progress on current and forthcoming developments, gain insight about the business community and news both about Cyprus and internationally. There are three club bodies: Cyprus Business Network in LinkedIn, Online Business Club, and Economic Diplomacy Council.

MEMBERS ● The Founder of the Club invites each member personally. ● The Club consists solely of individuals whom the Founder knows personally and works with through one of her business projects.

CYPRUS BUSINESS NETWORK IN LINKEDIN

Members: businesspeople at all levels of corporate structure.

SUCCESSFUL BUSINESS | JANUARY-MARCH 2022

COMMUNICATIONS AND NETWORKING SUCCESSFUL BUSINESS LEADERS’ CLUB

● This is a private group, membership is 'by invitation only' ● International and local connections of Ms Kardash ● Daily posts introducing members to each other ● Currently the network has 600+ members from 12 countries. The aim is to bring together (and introduce to each other) most of the personal contacts of Ms Kardash (people from at least 30 countries).

ONLINE BUSINESS CLUB

Members: CEOs, founders and shareholders, senior management of businesses located in Cyprus and abroad, local and international entrepreneurs. ● Members have the opportunity to participate in at least 20 online activities a year: private introductions, thematic discussions, seminars, workshops, lectures, presentations ● Events are organised online, via Zoom ● Once a year an offline event is held in Cyprus ● Ms Kardash will ensure that online meetings allow each member to network with at least 100 club members.

ECONOMIC DIPLOMACY COUNCIL

Members: only Owners/Founders/ Chairpersons or CEOs of internationally oriented business are accepted as members of the Council. ● The Council accepts 6 new members each month ● The business should be internationally represented or addressed to foreigners ● The member of the Economic Diplomacy Council must hold executive positions for the period of at least 5 years ● Each member is invited to 10+ offline events per year ● The physical events are organised for groups of 6-8 people (coffees, lunches, dinners) or up to 15 people (thematic meetings). Twice a year the Council runs

events where all its members gather together. ● Over one calendar year, every member meets all the members of the Council at least once. ● Economic Diplomacy Council members have complimentary access to the network of the Online Club and its meetings.

COMPLIMENTARY SERVICES/ BENEFITS TO ONLINE CLUB AND ECONOMIC DIPLOMACY COUNCIL MEMBERS ● Participation in the Cyprus Business Network (LinkedIn Private Group) ● Personal introductions to other SBL Club members ● Access to a big library of video files with recording of previous events, meetings and seminars (the ‘archive’ files are available for free or with up to 80% discount) ● Direct communication with Ms Kardash with a possibility to request a private online/offline meeting for advice on business development, networking, PR and GR ● 20% discount to participate in Vestnik Kipra’s business events ● 20% discount on the services provided by the Vestnik Kipra Group (online and offline advertising, PR, social media, translation) ● Discounts provided by the Club Partners, at selected restaurants and hotels.

SUCCESSFUL BUSINESS LEADERS’ CLUB MEMBERSHIP Please request more information from Ms Lusine Mirzoyan, Business Relationship Manager at mm@vkcyprus.com, or +357 99 656 432.

JANUARY-MARCH 2022 | SUCCESSFUL BUSINESS

BUSINESS DELEGATIONS Successful Business Magazine

BUILDING BRIDGES BETWEEN CYPRUS AND RUSSIA Successful Business Leaders’ Club and Vestnik Kipra have prepared a series of visits to Russia, as well as Cyprus-Russia sessions at two local conferences in Cyprus. These activities will re-establish active and fruitful business communication between both countries. It is common knowledge that personal communication plays an important role in business development. Communication between Cypriot and Russian businesspeople, visits, events, projects were interrupted in 2020-2021. Covid-19 was not the only cause of disruption; tax, banking, and legal reforms in Cyprus and Russia were also reasons to slow down. For more than a year air travel and international flights were banned; later – due to restrictions – not everyone was permitted to fly; there were no Cyprus-Russian business events, no visiting delegations. In 2022, no matter what, business has to adjust to the current uncertainty and find a way to resume personal communication. This article presents a series of events that are aimed at establishing new links and opportunities, to allow the exchange of thoughts, ideas, presentations, and proposals during personal meetings between Cypriot and Russian businesspeople.

SUCCESSFUL BUSINESS | JANUARY-MARCH 2022

PROGRAMME OF TRIPS

The Programme of Trips is a private initiative. On a trip, a delegation of 10-20 business owners will fly from Cyprus to Russia accompanied by Natalia Kardash and her team. Some trips are to attend major thematic events, others to personally meet Russian businesspeople and explore opportunities of the region.

STATUS OF DELEGATION MEMBERS

There are two types of participation: group or individual. Group participation implies a common programme for all participants, whereas individual participation offers tailor-made additional meetings with pre-selected potential partners.

TRIP DETAILS

For more information, please send your request to Programme Director Irina Patsalidou (ip@vkcyprus.com, +357 97 745 594)

BUSINESS DELEGATIONS BUILDING BRIDGES BETWEEN CYPRUS AND RUSSIA

CYPRUS – RUSSIA EVENTS 2022 Organised by Vestnik Kipra Group & Successful Business Leaders’ Club

Skolkovo Innovation Cluster Working Visit

14-16 March Skolkovo is the largest tech ecosystem in Russia, with over 4,500 startups and innovative companies, together with a business school, cluster, and science park. The Business Delegation will have a customised programme of meetings with Technopark management and resident companies (in small groups and at thematic round tables). Delegation members who choose the individual participation will stay in Moscow for an extra day to attend a number of pre-arranged personal meetings.

Residents 3,224 Revenue (2019FY)

160B rub

Total partners Work places

137 6,300+

Attracted investments (2019FY)

Professors 148 19B rub

Students 941

JANUARY-MARCH 2022 | SUCCESSFUL BUSINESS

BUSINESS DELEGATIONS Successful Business Magazine

Business Trip to Moscow Region

16-19 March

INDIVIDUAL PROGRAMME

Investment and business cooperation with companies in the Moscow Region. The delegation will be received by the Moscow Region Government and their regional Chamber of Commerce & Industry.

• Pre-arranged corporate meetings with potential clients and business partners • Separate meetings with government/business leaders • Visits to specific companies/factories/places • Private interpreter • Extra working days • Extra networking events.

GROUP PROGRAMME

• Two full working days. • Busy business programme: transfers, round tables, company visits, coffees, cocktail party, business reception.

Moscow Region (Moskovskayia Oblast)

Population

20,000,000 Area

44,340 km2 GDP

Moscow

$268 billion 25% GDP of Russia 1/3 of Russian consumer market

SUCCESSFUL BUSINESS | JANUARY-MARCH 2022

BUSINESS DELEGATIONS BUILDING BRIDGES BETWEEN CYPRUS AND RUSSIA

Business Trip to Novosibirsk City and Region Novosibirsk sits within the resource-rich geographic heart of Russia. This is the third largest city in Russia by population, and the most rapidly growing million-plus city in the world. There are 250+ large industrial enterprises in the city itself and the industrial area around it. The Novosibirskayia Oblast is a well-developed industrial region. Heavy industry, which accounts for about 20% of Siberian machinery manufacturing, is especially important. Oil reserves of the region amount to 204 million tons. Free gas reserves of 600 million cubic meters. Solute gas reserves of 5.2 billion cubic meters.

12-16 April Population

2,793,400 Area

177,800 km2 in comparison, the area of Greece: 131,957 km2

Cyprus delegation will engage with six local business associations. The visit is organised under the auspices of the regional Government with its active participation. The programme also includes meetings in Akademgorodok (a satellite town well-known as a science hub) and in the local Technopolis.

Moscow

Novosibirsk

JANUARY-MARCH 2022 | SUCCESSFUL BUSINESS

BUSINESS DELEGATIONS Successful Business Magazine

BEST INVEST Congress, Four Seasons, Limassol This two-day event brings together investment practitioners and advisors, leaders of investment funds, and companies in search for investors. In 2022, several delegations from Russia are expected to participate. The Congress will highlight opportunities for joint ventures, M&As, representation of hi-tech and IT businesses that focus on energy, clean technologies, agritech, efficiency, and artificial intelligence.

BEST INVEST 2022 MAIN TOPICS Renewable Energy. Industry and thought leaders will set the energy agenda

10-11 May

for Cyprus and the area, companies that work in this sector will showcase their technologies and investment opportunities. Energy transition will demand rapid decarbonisation, decentralisation, and digitalisation of energy production, supply, and consumption. Innovations and Practical Use of Blockchains. The Congress provides a platform for innovation-focused companies to showcase their technologies to international investors. Latest directives from CySEC regarding crypto business, forecasts on implementation of blockchain technologies by Cyprus State and private business, as well as opportunities that are offered by global digitalisation will be discussed during plenary sessions and panel discussions. Cyprus IT and New Tech Industry. The aim is to bring together the expats already established in Cyprus and foreigners who may consider Cyprus as a place to headquarter their startups or existing business. The details of new initiatives of the Cyprus Government will be summarised and presented, with brainstorming sessions on how to match theory with practice to help clarify the benefits of Cyprus for IT people.

SUCCESSFUL BUSINESS | JANUARY-MARCH 2022

BUSINESS DELEGATIONS BUILDING BRIDGES BETWEEN CYPRUS AND RUSSIA

Skolkovo Startup Village 2022 and International Technology Conference

23-27 May

In May, Skolkovo will host its annual international startup conference for tech entrepreneurs. This is the largest Russian technology conference. A number of innovative companies from Cyprus will present their ideas and participate in the Startup Bazaar – an exhibition of 200 local and international startups. The Cyprus business delegation will also have leaders of professional service firms to highlight the opportunities of startup registration and headquartering in Cyprus. During Startup Village, startups meet with investors, learn from successful global entrepreneurs, present their projects in the competition and at the innovation market; and major technology corporations, government officials, development institutions’ officials discuss tech trends and ways to form a new generation of entrepreneurs. The business programme includes over 300 interactive sessions, meeting areas for investors, exhibitions of startups and related service providers. Members of the delegation can book corporate exhibition space at Cyprus stand.

JANUARY-MARCH 2022 | SUCCESSFUL BUSINESS

BUSINESS DELEGATIONS Successful Business Magazine

Khanty-Mansiysk International IT Forum with BRICS and SCO Participation Area

534,800 km

Population

16,000,000 3 people per km 2

For the first time, a delegation from Cyprus takes part in one of the largest IT forums in the world which brings together leading Russian and CIS tech firms as well as Shanghai Cooperation Organization countries (China, India, Kazakhstan, Kyrgyzstan, Pakistan, Tajikistan, Uzbekistan, and Iran) together with BRICS (Brazil, Russia, India, China, and South Africa). In total, there are about 4,000 visitors from 40 countries. The Day of Cyprus is included in the programme of this three-day event. The members of Cyprus delegation could arrange for speaking opportunities.

Ugra region provides

Organiser and co-organisers

global 6% ofgasthesupply the Russian 43% ofgas supply

Moscow Khanty-Mansiysk Ugra region

5-10 June

SUCCESSFUL BUSINESS | JANUARY-MARCH 2022

BUSINESS DELEGATIONS BUILDING BRIDGES BETWEEN CYPRUS AND RUSSIA

Autumn 2022 The detailed information on autumn events will be published in the next issues of the Successful Business Magazine.

BEST LEGAL CONFERENCE IN LIMASSOL

22 SEPTEMBER

The next edition of our BEST LEGAL conference in Limassol is taking place in September. It brings together top Cypriot and international lawyers focusing on antimoney laundering, compliance, and other key issues. In 2022, in addition to the main programme, the event has two sessions for Russian-speaking lawyers and business owners from 8-9 countries.

SURGUT 27th OIL AND GAS INTERNATIONAL TECHNOLOGY EXHIBITION

26-30 SEPTEMBER

A visit to the largest oil and gas technology exhibition in Russia. The event brings together 400 companies that present their products and services and about 4,000 professional visitors who look for new technologies and solutions. The event is attended by government representatives and companies from over 50 regions and countries.

BUSINESS DELEGATION TO NIZHNY NOVGOROD REGION

Moscow Surgut Nizhny Novgorod

OCTOBER 2022

Investment and business cooperation with companies in the Nizhny Novgorod Region. The delegation will be received by the Regional Government of Nizhny Novgorod.

SKOLKOVO OPEN INNOVATIONS FORUM

DECEMBER 2022

The year ends with a visit to the Skolkovo Open Innovation Forum. This is one of the best technology and future conferences in Europe, and the largest event of this kind in Russia.

100+ speakers 1,500 offline participants

50,000

online participants

1,000,000 views

JANUARY-MARCH 2022 | SUCCESSFUL BUSINESS

STATISTICS AND ANALYTICS Successful Business Magazine

WORLD DATA VISUALISED At the heart of the world’s digital activity are the everyday services and applications that produce unimaginable quantities of user activity and associated data. Big Tech companies have quite the influence over our lives. That influence is becoming difficult to ignore, and draws increasing media and political attention. One tangible measure of this influence is the massive amount of revenue Big Tech companies bring in. To get a better sense of this, we can look at Big Tech’s revenue generating capabilities on a per-minute basis.

SUCCESSFUL BUSINESS | JANUARY-MARCH 2022

Just four countries – the US, China, Japan, and Germany – make up over half of the world’s economic output by gross domestic product (GDP) as you may see below. You may be surprised that the main offshore and tax haven jurisdictions have nothing to do with small countries like Cyprus. By weighing a country’s ability to hide money by its relative share of offshore financial services, we see the tax havens with the biggest impact on the global economy.

STATISTICS AND ANALYTICS www.cyprusrussianbusiness.com

Data Never Sleeps 9.0 How much data is generated every minute? The 2020 pandemic upended everything, from how we engage with each other to how we engage with brands and the digital world. At the same time, it transformed how we eat, how we work, and how we entertain ourselves. Data never sleeps and it shows no signs of slowing down. In our 9th edition of the 'Data Never Sleeps' infographic, we bring you a glimpse of how much data is created every digital minute in our increasingly data-driven world.

JANUARY-MARCH 2022 | SUCCESSFUL BUSINESS

STATISTICS AND ANALYTICS Successful Business Magazine

WORLD'S BIGGEST PRIVATE

Tax Havens When the world’s ultra-wealthy move their money around, which countries or territories do they utilise? Here are the world's top 20 tax havens as ranked by the 2020 Financial Secrecy Index (FSI). * Scores are calculated by weighing each banking system’s ability to hide money with the Jurisdiction’s share of the global offshore financial market.

SUCCESSFUL BUSINESS | JANUARY-MARCH 2022

Gross domestic product (GDP) serves as a barometer for a country's economic health. It measures the total market value of final goods and services produced in a country during a given year. Together, the US and China account for 42% of global GDP. Here is GDP by country according to IMF estimates.