Should the European Union ignore bitcoin and other digital currencies until the proper banking regulations and rules are in place? That’s what the European Banking Authority (EBA) is urging in a new statement that is recommending the 28-state bloc establish safeguards to protect the system and consumers.
The EBA suggests that EU officials adopt guidelines for trading platforms and encourage new organizations to oversee virtual currencies in order to offer reassurance that no one group is actively manipulating the “integrity” of a digital currency and its elements.
In addition, the EBA believes financial institutions should not be maintaining a sum of cryptocurrencies, which means they should refrain from buying, selling or holding any kind of digital currency.
The European banking watchdog also listed 70 risks identified with bitcoins and other virtual currencies. For instance, the EBA cited money laundering and digital currencies being affiliated with crimes and noted that anyone who has any type of computational knowledge can exploit the defects of a cryptocurrency.
In a response to the announcement from the EBA, EU financial services chief Michel Barnier commented on the matter through a statement in which he confirmed that it will now examine potential regulations to address possible risks.
“We will now look into what can be done to possibly introduce regulation in this sector, particularly to address the risks of financial crime that arise from the anonymity that characterises many virtual currencies,” said a spokesperson for Barnier in an emailed statement issued to Reuters. “It is imperative to move quickly on this issue. The potential for money laundering and terrorist financing is too serious to ignore.”
Europe has been at the forefront of the cryptocurrency industry’s development. Lawmakers and regulators have been accused of dragging their feet when it comes to taking a stance on bitcoin as legislators continue to tergiversate as to whether or not to institute new regulations.
