The EU Intends to Monitor Virtual Currencies Rather than to Regulate Them

News and Analysis

According to Reuters, the EU intends to continue monitoring virtual currencies rather than regulating them right away. The intent is said to be justified by little knowledge of virtual money’s regulatory risks deemed inherent, like being prone to money-laundering. The other reason is that cryptocurrency market in general is incomparably smaller than that of fiat money with around $7 billion in cryptocurrency versus $5 trillion on exchange markets around the world.

Following the massacre in Paris last year, some European politicians engaged in speculations as to the role non-regulated payment methods played in preparation of the attack. In late 2015, several right-wing representatives at the European Parliament filed a motion calling the EU member states to impose strict regulations on digital currencies or even ban them completely. Notably, the representatives exemplified Russian attempts to ban bitcoin and other digital currencies in their reasoning of the proposal. French minister for finance also expressed an intent to impose regulation on digital currencies among other means of payment beyond government control.

Olivier Salles, a senior official at the European Commission, however, stated that the entity prefers monitoring the virtual currency market rather than making hasty decisions as to its regulation:

“It’s easy to fail when you regulate, you can be too early and too late. From the European Commission’s perspective, we are more on the monitoring side. We want to understand better what is happening,” he said at the hearing in the European Parliament yesterday.

However, the European Union is still in the process of developing measures to hinder terrorism funding. The bloc-wide program for doing so is to be published next months.

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