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EC focuses on monitoring, not regulating, virtual currencies

29 January 2016  |  10147 views  |  0 EU flag

The European Commission is examining whether virtual currencies need to be regulated in the wake of last November's terrorist attacks in Paris, but is currently more focused on monitoring the likes of bitcoin than on rushing out new rules.

The use of virtual currencies for terrorist financing jumped up the political agenda following the Paris attacks, but speaking at a European Parliament hearing into virtual currencies, the EC's Olivier Salles stressed caution.

"One of the big challenges is not how fast and how far to regulate, but how to correctly monitor this fast evolving technology," Salles told MEPs.

Thaer Sabri, from the Electronic Money Association, argued that proportional regulation would be desirable, although Siân Jones of the European Digital Currency and Blockchain Technology forum, said that any rules should be limited to anti-money laundering and countering terrorist financing.

More generally, Salles told MEPs that the Commission has concerns over virtual currencies because of a lack of protection for users because of volatility and hacks such as the Mt Gox case.

However, Sean Ennis, a senior economist from the OECD dismissed anonymity worries, arguing that crooks would be far better off using cash, adding: "The ownership string for virtual currency is public and that allows a tremendous amount of analysis of transactions."

MEP Jakob von Weizsäcker is now putting together his own report on virtual currencies, which will be voted on by economic committee, then the parliament as a whole in May before being sent to the Commission.

Seperately, a report by Europol into the Paris attacks says law enforcement agencies have yet to unearth any evidence that Islamic State has been using bitcoin to finance terror attacks.

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