It seems the virtual currencies are not able to gain the trust of the European Banking Authority. The EBA has advised the European Banks to prevent themselves from entering into any transactions of virtual currencies. The banks should not buy, hold or sell the virtual currencies like Bitcoin till the time an adequate regulatory regime is implemented. The new regulations will prevent the misuse of virtual currencies.
There are many potential benefits that trader gain from Bitcoin. They allow for faster and cheaper transactions. They allow easy financial inclusions. But still as per the EBA, the risks are more than the benefits. The statement was released on Friday by the ECB after the assessment of virtual currencies. It was conducted by the European Securities and Markets Authority, EBA and the European Central Bank.
EBA came up with its concerns over the use of virtual currencies. BTC/USD pair started trading in 2009. It is one of the most popular virtual currencies. In 2012, it touched a high of $1,000, and presently it is trading around the levels of $625. But the problem for the virtual currency started when one of the largest Bitcoin exchanges in the world collapsed in February 2014. It was Mt. Gox trading exchange based in Tokyo.
After the collapse, regulators have become wary about Bitcoin. They now want to have scheme governing authorities. It will make sure that the events like collapse of Mt. Gox trading exchange don’t happen again. It will focus on the integrity of the virtual currency.
Virtual currencies like Bitcoin are exposed to a higher risk. There are as many as 70 risks that are linked with the use of virtual currencies. They are used as easiest means in cases of money laundering and many other financial crimes. Anyone can create a scheme and can change its function if it possesses ample computational power. It opens the gateway for currency exploitation. It can be seen in the decentralized mining process that is used to create Bitcoin.
EBA focused on two parameters. It wants stringent regulations and secondly it wants to stop the use of virtual currencies till the time those regulations are implemented. It could prevent the traders from the risks associated with the virtual currency schemes. Following the news of EBA, BTC/USD pair started the week in negative territory. It was unable to move into the green zone and was trading around the levels of $628 in the early trade.
July 07, 2014 at 05:45AM
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