EU warns of cryptocurrency regulations unless risks are tackled

27 Feb 2018

Digital currencies such as bitcoin are being monitored by regulators. Image: Igor Batrakov/Shutterstock

A cryptocurrency clampdown could be on the cards.

Cryptocurrency is nothing if not notorious, and the EU looks set to take steps towards regulation unless global risks are somewhat mitigated.

The global spike in cryptocurrency trading and speculation has regulatory bodies across the entire planet contemplating a tighter set of rules.

Future Human

EU financial chief Valdis Dombrovskis was speaking at a roundtable meeting attended by financial industry bodies, the European Central Bank and the Financial Stability Board, which is tasked with regulating the economies in the G20.

He said: “This is a global phenomenon and it’s important there is an international follow-up at the global level.

“We do not exclude the possibility to move ahead [by regulating cryptocurrencies] at the EU level if we see, for example, risks emerging but no clear international response emerging.”

Cryptocurrency concerns

Finance ministers from G20 countries and central bankers will be meeting in Buenos Aires in March, and it is expected that cryptocurrencies will be a major talking point for the officials.

Concerns include the potential use of cryptocurrency in terrorist or criminal activity, from drug trading to money laundering.

Dombrovskis added: “Based on the assessment of risks and opportunities, and the suitability of the existing regulatory framework for these instruments [cryptocurrencies and ICOs], the commission will determine if regulatory action at EU level is required.”

Close monitoring required

Earlier in February, the finance ministers of both France and Germany joined the chorus of regulators and public figures calling for cryptocurrencies to be more closely monitored. Bruno le Maire and Peter Altmaier signed a letter addressed to their other G20 counterparts saying that cryptocurrencies could “pose substantial risks for investors”.

While cryptocurrencies are being viewed with suspicion by European officials, the blockchain technology that underpins them has been generally well received. The EU Blockchain Observatory and Forum was established in January to consolidate and grow initiatives employing the technology within the EU.

Other countries have been looking into regulating cryptocurrencies, and advertising relating to cryptocurrency was banned by Facebook in January.

It seems at this stage, due to cryptocurrencies still amounting to a relatively tiny element of the general financial ecosystem, that there is no strong agreement as to how they could be regulated internationally.

Ellen Tannam was a journalist with Silicon Republic, covering all manner of business and tech subjects