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In Cyprus, ATM withdrawals limited, 'bitcoin ATM' plan in the works

March 25, 2013

Two of the largest banks in Cyprus have cut their ATM withdrawal limits from €260 ($336) to €100 ($129). The step was taken in order to prevent a run on accounts at the two banks, whose assets are central to an EU bailout of the island nation's financial sector.

The Bank of Cyprus and the Popular Bank of Cyprus have both imposed a €100 maximum, but withdrawal limits at smaller banks remain unchanged, a government official said.

According to a Reuters report at the Huffington Post, a spokesperson for one of the banks said the restriction on withdrawals would remain in place until the bank reopens on Tuesday morning, or until the European Central Bank confirms the bailout funding.

The Globe & Mail reported that the Cyprus bailout will involve shutting down the Popular Bank of Cyprus (aka Laiki) and shifting all its deposit accounts of €100,000 ($129,000) or less to the Bank of Cyprus to make it a "good bank."

At both banks, deposit amounts above €100,000 (which are not guaranteed under EU law) will be used to pay Laiki's debts and shore up the Bank of Cyprus. The seized funds come to about €4.2 billion, the Globe & Mail report said.

In a piece of unusual related news, Jeff Berwick, CEO of TDV Media, and past CEO of Canadian financial website Stockhouse, announced Monday that he would open the world’s first bitcoin ATM in Cyprus as a response to Cypriots' difficulties obtaining their money from banks.

Bitcoin is a decentralized digital currency based on an open-source, peer-to-peer Internet protocol. Bitcoin users purchase the currency online and hold it in a digital wallet. A bitcoin's value is based on the U.S. dollar, but it can be converted into any currency.

Software for the bitcoin ATM enables a two-way, automated bitcoin market, Berwick said. He plans to place a bi-directional (bitcoin for cash, cash for bitcoin) dispenser on Cyprus.

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