EU Commission: New announcements, old efforts

Leading members of the EU Commission met with representatives of the Financial Stability Council, central banks, business and industry in Brussels yesterday, according to the Guardian. The Latvian politician Valdis Dombrovskis, who is responsible for financial stability in the EU, announced that they had met to prepare the regulation of crypto currencies and the issue of ICOs for the next meeting of the G20 nations in Argentina.

After the EU Commission had already asked the financial supervisory authorities about two weeks ago to tighten up their warning notices for crypto currencies and also proposed to include crypto currencies in the EU Money Laundering Directive, there now appears to be a need for action to press ahead with regulation. This is a global phenomenon and one must respond to it on an international basis, said Dombrovskis. One would not exclude the possibility of addressing this issue if there were a lack of response to a growing threat in many nations. At the press conference, the Latvian politician at least stated that the innovation of this new technology had to be recognised.

Known criticism

Dombrovskis then repeated like a prayer wheel the criticism that has often been heard from various central bank representatives and politicians. Digital currencies are often the subject of speculation, which entails considerable risks. That is why the EU must urgently warn against a possible total loss of deposits, says the politician. Known also the reproach, the Bitcoin is misused for the most part by criminals for money laundering and for other illegal machinations. Yesterday’s topic of discussion was also Initial Coin Offerings (ICOs). For newly founded companies, this is a good opportunity to raise money through an ICO, Dombrovskis said after the meeting. However, he criticised the lack of disclosure of the identity of the founders and their business plan. In addition, online trading platforms within the EU are to be legally obliged to avoid tax evasion. The market will continue to be monitored together with international experts in order to initiate further steps if necessary. The EU Commission’s new “FinTech Action Plan” is to be completed by the beginning of March. An exact timetable for the introduction of regulation was not mentioned.

Politicians waver between rigorous demands and fear of endangering jobs

ECB manager Yves Mersch recently called for tough action on crypto currencies. The Mexican bank manager Agustín Carstens goes even further in his statements. He described the Bitcoin as a combination of a financial bubble, an environmental disaster and a snowball system. The topic of crypto currencies will definitely be discussed in Buenos Aires at the next G20 meeting in March. There should be no consensus within the G20 on possible regulation. Some politicians fear that too tight rules could lead to the innovative blockchain technology being thwarted and jobs being lost as a result. CSU MEP Markus Ferber, on the other hand, argues for early regulation. He suspects that many investors are not aware of the dangers of virtual currencies and could therefore lose their money. Virtual currencies must be regulated as tightly as other investment products, Ferber demands.