The EU has warned that it is going to regulate cryptocurrencies if the risks that accompany the rise of Bitcoin and its rivals are not addressed at the global level first.
Some more discussions are going to be held at the G20 summit in March, but the actual policy unlikely to materialize until late this year or early 2019.
The EU financial chief named Valdis Dombrovskis, speaking after hosting a roundtable discussion in Brussels attended by the European Central Bank, industry agencies and the Financial Stability Board, which writes and coordinates regulation for G20, said:
We do not exclude the chance to move ahead at the EU level if we see, for instance, risks emerging but no clear international response emerging.
He also added:
This is a global phenomenon, and it is important that there is an international follow-up at the global level.
G 20 ministers, as well as central bankers, are going to meet in Buenos Aires, Argentina, in March, and cryptocurrencies are set to be on the agenda. With saying this, the US is taking things slowly at the moment, and it is going to decide how to address the problem later this year or early in 2019.
Regulation of cryptocurrencies could also see them being brought in line with financial legislation which was designed to combat money laundering and counter-terrorism – problems that governments all over the world like to tie to cryptocurrencies.
Even though it is worth pointing out that Bank of Japan reports last week determined that less than 1% of the money laundering cases in the nation are crypto-related.
Some other regulations could also attempt to force traders to disclose more about their identities, in turn making it harder to use Bitcoin or some other cryptocurrencies for illegal activities.
The center-right member of the European Parliament, named Markus Ferber, reiterated the points by Dombrovskis, saying that a quick EU regulatory response is needed, rather than waiting years for international rules to trickle through: Ferber said in a statement:
To be sure that the retail investors do not fall victim to market manipulation, as well as fraud, virtual currencies should be regulated as some other financial instruments.
Yves Mersch, who is a member of the ECB’s executive board, has in recent time called for a global clampdown on cryptocurrencies, saying that the central bank was aligned with the views voiced by Agustin Carstens, who is the head of the Bank for International Settlements. Carstens condemned Bitcoin as “a combination of a bubble, a Ponzi scheme, as well as environmental disaster.”
Looking at certain specific nations, Germany, as well as France, said earlier this months that while new opportunities arise from cryptocurrencies, such as blockchain technologies, they could also pose some substantial risks for investors, as well as be vulnerable to financial crime without the proper safeguards in place.
Policymakers also worry about losing their jobs and growth to some other regulations if they split down hard on innovation in the sector, stemming from the blockchain technology which underpins cryptocurrencies, which Dombrovskis maintains holds strong promise. Dombrovskis said:
We see a lot of speculation that is why I asked the ESAs to update the warnings.
The former Latvian prime minister was particularly concerned about the lack of transparency of issuers. He also added:
That is why it is significant to have more in-depth discussions.