Two of the main European Union banking regulators are calling for a unified code for regulating cryptocurrency across all the member states.
The rise of cryptocurrency has caused quite a bit of hassle for governments. While such entities pointedly ignored Bitcoin and its digital brethren for quite some time, now they look to corral this disruptive technology. Some governments have chosen to ban virtual currencies outright while others seek to regulate them to varying degrees. In the European Union, two of the largest banking regulators have released reports asking for uniform regulations to be put into place for all of the EU’s member states.
Banking Regulators Not Thrilled with Crypto
The two banking regulators in question are the European Banking Authority (EBA) and the Europe Securities and Markets Authority (ESMA). They each released reports recently concerning crypto and ICO regulation.
The EBA noted that a lack of uniform regulations is leading to an uneven playing field, which means companies can relocate from a crypto-restrictive country to a more crypto-friendly one. This can be seen by quite a few companies making the move to Malta, which has worked hard to become a blockchain hub.
Adam Farkas, the Executive Director for EBA, said:
The EBA’s warnings to consumers and institutions on virtual currencies remain valid. The EBA calls on the European Commission to assess whether regulatory action is needed to achieve a common EU approach to crypto-assets. The EBA continues to monitor market developments from a prudential and consumer perspective.
Not to be outdone, the ESMA also sounds the alarm bells for an uneven playing field, while also noting that anti-money laundering requirements should be required for all cryptocurrencies.
Steven Maijoor of the ESMA says::
Our survey of NCAs highlighted that some crypto-assets may qualify as MiFID financial instruments, in which case the full set of EU financial rules would apply. However, because the existing rules were not designed with these instruments in mind, NCAs face challenges in interpreting the existing requirements and certain requirements are not adapted to the specific characteristics of crypto-assets.
He then adds:
Meanwhile, a number of crypto-assets fall outside the current financial regulatory framework. This poses substantial risks to investors who have limited or no protection when investing in those crypto-assets.
In order to have a level playing field and to ensure adequate investor protection across the EU, we consider that the gaps and issues identified would best be addressed at the European level.
More Calls for Cryptocurrency Regulation
As time goes on, there are more and more calls for increased crypto regulation. This is often promoted under the guise of consumer protection as there are still quite a few shady operators existing in the crypto ecosystem.
Japan has stepped up their regulatory efforts after some notable (and sizable) hacks of cryptocurrency exchanges. In the United States, the federal government is still wrestling with regulation, which means individual states are putting forward their own unique regulatory requirements.
One of the recent calls for greater regulation came from the Winklevoss twins, owners of the Gemini crypto exchange. The exchange is currently running an ad campaign pushing for greater regulation.
Chris Roan, marketing director of Gemini, said:
We believe that investors coming into cryptocurrency deserve the exact same protections as investors in more traditional markets, adhering to the same standards, practices, regulations and compliance protocols.
In our competitive set there are widely varying degrees of adherence to regulatory guidance from people that oversee the more traditional financial marketers.
Some players are devoted to decentralizing authority over money, a key tenet of many cryptocurrency advocates, while others including Gemini believe there has to be a ‘bridge’ between the old system and a new one.
Overall, regulation is inevitable as national governments are not going to let an alternative monetary system exist within their country without some sort of oversight.
Do you approve of greater cryptocurrency regulation or not? Let us know in the comments below.
Images courtesy of Pixabay and Shutterstock.