The Committee on Economic and Monetary affairs of the European Parliament (ECON) has held a meeting to discuss possibilities of bitcoin regulations. This might be another step in the European effort to cope with terrorist threat following the recent Paris attacks.
Talking about the advantages bitcoin brings to the digital finance, speakers mentioned its high level of certainty regarding ownership and the quick and cheap transactions. The challenges the cryptocurrency presents include its volatility of exchange rate and vulnerability to theft by means of hacking.
Sean Ennis, Senior Economist in Competition Division, OECD, suggested governments should adopt supportive policy regarding various cryptocurrencies (without expressing preference for one over another). Admitting that some owners of bitcoin have been using it for indecent purposes, Ennis emphasised that anonymity of digital currencies is no more certain than that of cash. Forbidding bitcoin is thus as illogical as forbidding cash operations. Therefore, he claimed, the future regulatory steps should be anything but prohibitive.
Ennis disagrees with the claim that virtual currencies can pose a threat to monetary policies. Digital currencies cannot undermine fiat money and prevent central banks from doing their job as long as taxes are paid in legal tender, he said.
Dr Thaer Sabri, Chief executive of Electronic Money Association, called for proportionate regulations in the financial sector. He warned against drastic measures that might be taken in view of the Paris attacks. Sabri reminded about Kenya’s M-Pesa mobile financial service start-up that flourished in an environment that lacked legislative regulations. Too much regulation can ruin the emerging industry, and it would be good to wait until the cryptocurrency system matured, thinks Sabri.
Siân Jones, Founder of European Digital Currency and Blockchain Technology Forum (EDCAB), said that the threat of bitcoin being used for money laundering is overestimated. According to Jones, the euro is 92 times more likely to be used for money laundering than bitcoin.
But Jacob von Weizsäckerm, German MEP, committee member and a rapporteur at this discussion, emphasized the threats posed by bitcoin. Cryptocurrency is a technology that is likely to grow and may soon become globally relevant, he said. We should find a way to control or at least monitor it (without stifling) before its shortcomings affect people worldwide. The irreversibility of cryptocurrency transactions – something that is supposed to be one of its advantages – can in fact become a problem. It is necessary to put an end to thousands of illicit transactions that nowadays are irreversible within the digital currency system, claimed von Weizsäckerm. And if “precautionary regulation” is excessive, then “precautionary monitoring” is something quite necessary today, he said.
Andrew Levich
