5 July 2014

Bitcoin Faces Regulatory Criticism: EU Ordered Lenders to Shun Virtual Currencies



Bitcoin Faces Regulatory Criticism: EU Ordered Lenders to Shun Virtual Currencies

Bitcoin Faces Regulatory Criticism: EU Ordered Lenders to Shun Virtual Currencies



The European Commission has made it clear it would try to impose rules on virtual currencies like Bitcoin when the banking regulator ordered lenders to avoid them.

A spokeswoman for Financial Services Commissioner Michel Barnier, Chantal Hughes said by e-mail: “It’s imperative to move quickly on this issue. The potential for money laundering and terrorist financing is too serious to ignore.”

The EU executive arm, the Commission, moved after the European Banking Authority said banks should not acquire, hold or sell virtual currency while regulators did not develop safeguards to defend their integrity. The regulator discovered more than 70 risks associated with currencies from identity theft by hackers with the ability to be focused on trading platform.

Regulatory agencies and prosecutors worldwide with even greater attention monitoring the virtual currencies.

Mt Gox, once the world’s largest exchange of Bitcoin, filed for bankruptcy in Japan previously this year against the backdrop of the claims it lost 850 000 Bitcoins. Central bank of China banned the company from financial transactions virtual currency last year.

A research fellow for finance and regulation at the University of Dundee, Scotland, Richard Reid said by e- mail: “Regulators have become alert to the potential for fraud and disruption. Such attention from regulators is bound to curb the growth of markets such as Bitcoin.”

According to the EBA it called on the EU to develop regulations for trading platforms and start groups to monitor every online currency so that no individual can manipulate currency. The EU should consider increasing the scope of the law on combating money laundering in order to better capture virtual currency.

The regulator warned: “The EBA is of the view that a regulatory approach to addressing the risks it has identified would require a substantial body of regulation.”

EBA noted that the widespread use of the currencies could also make it more difficult for central banks to steer the economy by making the effects of monetary policy more difficult to predict.

Bitcoin currency gained prestige after law and securities agency said in Senate of U.S. hearing that it may be a legal means of exchange. Bitcoins price exceeded $ 1,000, as speculators expected widespread use of electronic money.

Since then the price has slumped to about $ 631 on Bitstamp, online exchange based in Slovenia. According to Bitstamp it will cost about $ 8.4 billion to buy all Bitcoins in existence.

According to Simon Dixon, director of British Digital Currency Association, a group representing the country’s virtual currency industry, the EBA’s statement is “not very helpful ” and may keep only individual users of specific virtual currencies.

He said in e-mail: “Banks are not engaging with digital currencies yet as it is a person-to-person network that operates outside of banking. The more likely result of the announcement is to scare people from using digital currencies rather than banks.”




July 04, 2014 at 04:53PM



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