Eurozone Says NO To Bitcoin
In a recent reminder, the European Bank Authority has advised Europe-based banks to desist from allowing transactions in virtual currencies including Bitcoin. The pause mode should be in effect, the banking authority recommended, until regulations come into force, which prevent the ‘misuse’ of the use of cryptocurrency.
EBA cautioned that the risks inherent under current banking systems could well outweigh the visible benefits of the digital currency. In a statement on Friday, the Central regulatory body for Euro Zone stated that, “While there are some potential benefits from virtual currencies, such as faster and cheaper transactions, as well as financial inclusion, the risks outweigh the benefits.”
The above recommendation follows ongoing assessments by leading banking institutions in Eurozone- EBA, European Securities and Markets Authority as well as European Central Bank.
EBA current recommendations were based on the principle of ‘decentralized mining process’ which is used to generate the cryptocurrency such as bitcoin. The Authority expressed that, “A virtual currency scheme can be created- and its function subsequently changed- by anyone with sufficient share of computational power.”
At the center of the considerations was the recent collapse of one of the most popular and largest of bitcoin exchanges- Mt.Gox, based in Tokyo, which has once again brought to the forefront, the inability of the current banking and currency systems to sustain and handle the virtual currencies.
Recommendations by the European authority also included ‘scheme governing authorities’ to contain the collapse of Mt.Gox type of incidents and events.
Another key factor which the Authority sees would be an offshoot of virtual currency is in crimes- money laundering to funding of terrorist activities. The Authority has listed over 70 associated risks with bitcoin-use adoption.
EBA concluded that, “a regulatory approach to address these risks would require a substantial body of regulation.”
July 07, 2014 at 05:37AM
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