EU Wants to Monitor Bitcoin, Not Regulate It

The European Parliament’s Economic and Monetary Affairs Committee (ECON) held a public hearing on Monday 25 January 2016 on virtual currencies and the role of regulators.

The role of virtual currencies in abetting illegal activities such as money laundering and financing of terrorism was a central idea discussed during the conference.

ECON policymakers have taken a balanced and careful approach to the impact of virtual currencies and cryptocurrencies, taking into account both the advantages and potential risks of adopting the technology.

Clearing up misunderstandings

Sean Ennis, a senior economist at the OECD, spoke in favor of virtual currencies. He said that while many governments may rule out virtual currencies because they may be used for illegal activities, virtual currencies are safer than paper money in many ways; virtual currencies have far fewer negative aspects than cash.

He added that the EU could learn lessons from how Britain maintained lower regulatory requirements for peer-to-peer lending, allowing the nascent industry to innovate and grow faster than elsewhere in Europe.

Sian Jones, founder of EDCAB, said :

“Blockchain delivers trust in a trustless space. It has the ability to provide an irrefutable single source of truth that cannot be altered or corrupted. The potential of this trust mechanism has not been missed by either the public or private sectors.”

She also added that encryption technology provides a lot of transparency, in contrast to the public's belief that this is not anonymity but pseudo-anonymity, which only has the appearance of anonymity.

Supervision is not standardized

"As a regulator, the EU is looking closely at whether bitcoin needs to be regulated closely and whether it can be used to finance terrorism or launder money," said one decision-maker at the hearing. "Following the Paris attacks last November, we want to make sure virtual currencies cannot be used to finance terrorism."

Olivier Salles, a senior finance official at the European Commission, said there were risks associated with virtual currencies, such as price volatility, stability of platforms, and cyber risks like theft and hacking, adding that he was in favor of monitoring these developments rather than proposing new rules.

Mentor consultant Jeremy Miller talked about the rules of blockchain technology:

“They are regulating capital and they are already registered with regulators. If the company and the activity are already regulated, I don’t know what it means to regulate this technology.”

The hearing is part of the ECON committee's process to prepare its report. It remains to be seen what recommendations the final report will make.

Expert Talks

CoinTelegraph spoke to Sian Jones of EDCAB, one of the speakers at the public hearing. She previously spoke to us about what to expect from the hearing.

She said:

“Interestingly, there were no regulators at yesterday’s hearing. The Commission’s policymakers and the legislators in the Parliamentary Committee, for the most part, seem not to want to rush into legislative action and risk stifling innovation. However, the hearing is only the beginning and we must wait a few months to see what recommendations, if any, will be made in the report. Of course, EDCAB will continue its dialogue with all political groups and interested MEPs during the Committee’s deliberations.

Asked what would happen from the final report of the hearing, she added: "My experience with the EU institutions has taught me not to predict the outcome of a report. I think it is likely that there will be a revision of European anti-money laundering regulations. What is harder to predict is the systemic and consumer protection response. The possibility of preventive measures remains very likely. I hope there will be some recommendations in the final report."