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Last week, in the London European Banking Organ, he published 46 pages “Opinion on virtual currencies”, covering and centralized and decentralized digital currency systems. The EBA is entrusted with ensuring efficient and consistent regulation of financial institutions across the EU and this document provides detailed risk evaluation that presented digital currencies, as well as initial thoughts on how to regulate.
Many headlines focused on the ebony “prohibition” on regulated financial institutions that hold, buy or sell digital currencies. However, the report actually consists of many specific short-term recommendations that will help digital currency companies continue to innovate and flourish, without directly load full regulation.
Risks (and benefits)
The report begins on the occasion of the risk and benefits that perceives as inherent in the use of digital currencies. All transaction costs, shorter processing times, increased financial inclusion and greater privacy / safety, although it is argued that none of them is truly in the EU in the EU anyway (!) And therefore will not have much influence.
It is much made from seventy risks that are then listed as stemming from digital currencies. These range from Bitcoin Stock Exchange disappear with customers’ funds for financial regulators that criticize due to not adopting appropriate regulation! Many of these risks are not new – financial regulators have already faced cash and other payment systems, investment products and technologies. Which does not mean that these risks are not real, and should be resolved by the head by the digital currency community.
Long term reply (perhaps)
So what do I do about that upcoming Bitcoin Apocalypse? The EBA clearly knows how to believe that the appropriate long-term response is to these risks of the Institute of Comprehensive, spoken regulations. It warns of the forcing square wedge into a round opening by setting digital currencies under the addition of existing legislation, such as electronic money or payment regulations. This excludes fast repair, but at least recognizes the basic differences between FIAT and digital currencies, and between the access necessary for the effective regulation regulation.
These relaxing controls look very similar to those that exist for other payment systems, with due diligence, reporting requirements, registration / authorization and detachment of client funds for different types of digital currency business. However, one proposal exits – the creation of the “schema management body”, non-governmental entities that establish and manage rules for the use of a particular digital currency – ie. Bitcoin Foundation on steroids. EBA admits that this “can, in the beginning, incompatible with conceptual origin [digital currencies] As a decentralized scheme “- and they would be right. Unclear allegations are that such a body can only be decentralized, although it could be a” legal person “whether each attempt will regulate the contributive of digital currency, not companies which offer digital currency services, they would succeed.
But it’s all, the eba’s reception reception, he still asks in heaven. Such a regulatory scheme should be developed, accurately adapt and implement for years. During this period they are used in the way that digital currencies are used can change well, organizations such as Association for Digital Currency in the UK Will lobby for change, and other jurisdictions will suggest alternative approaches. More interests are short-term recommendations made in the report – concrete measures that could have an immediate impact on digital currency companies in the EU.
Short-term response
The EBA direct recommendations focus on the maintenance of separation between regulated operations of financial services and digital currencies. The key to this is their recommendation that:
“National supervisory bodies discourage credit institutions, payment institutions and e-money institutions from purchase, posture or sales [digital currencies]”
Barclays never fell just over him to leave a long Dogecoin, but it will surely provide another reason not to. However, this does not prevent the banks from indirectly engage in digital currencies, for example, offering bank accounts to a digital currency enterprise – a point of explicit author. The recommendation was also observed in the exclusion of “investment firms”, which is also falling into EBA, Protective Funds, etc: fill out the boots!
It is also a note that the recommendation is that the digital exchange of currencies in the framework against money laundering and the requirements against terrorist financing should be made. This is of importance for many digital currencies that are unable to get bank accounts – banks often allege the lack of monitoring AML / CTF as their reason. In the UK, this could mean that this business fell under the supervision of HMRC – not ideal, but a step in the right direction.
Short-term measures recommended in this report give a digital currency company for several years of breathing space for the continuation of innovation, without a large load of compliance. They also give an unprecedented legitimacy to these companies by bringing them into the AML / CTF / CTF regulations box. Perhaps most significantly prevent great players from being processed and dominated in a varied new industry that still experiments and disputes the status quo. This can only be a good thing for the future of digital currencies.
EMEA Financial Services Compliance
