Banks And Cryptocurrencies Global Evaluation: Europe
European regulation awaits further instruction
European leaders seem to have finally come to a consensus that the innovative technology underlying crypto-assets “has the potential to improve efficiency and inclusiveness of the financial system and economy more broadly,” as emphasized at the G20 summit in Argentina in March 2018.
However, when it comes to regulation, the lack of consensus among global leaders made it impossible to enact broad legislation. Various European representatives pushed for coordinated legislation to restrict cryptocurrencies during the G20 summit with no success. Instead, there was agreement to set a July 2018 deadline for regulatory proposals.
The hang-up over regulation may be due to governments and financial leaders recognizing that legislation will only be effective if pursued as a joint venture with other European countries.
Government organizations, politicians, regulators, and central banks that were present at the gathering discussed the instability of cryptocurrency markets and the potential for criminal activity. But the major developments to come from the summit were the characterization of crypto-holdings as property for tax purposes; required compliance of crypto firms with standards set by the Financial Action Task Force (FATF); and, of course, the July deadline.
Most nations initially understated the potential of Bitcoin and allowed cryptocurrency activity with little resistance, but now governments are taking a second look at how cryptocurrency and Blockchain tech will affect future labor markets, digital infrastructure, and financial institutions.
Many countries may be moving to regulate and restrict cryptocurrency use, but European financial actors are also leading the research and development of Blockchain tech in preparation for institutional and mainstream adoption of virtual marketplaces.
The vice president of the European Commission recently urged EU countries to be politically and financially supportive of developing Blockchain tech because “Europe is best positioned to play a leading role.” The Commission proposed a 23-point action plan to integrate the development of Blockchain with the financial sector around the same time it proposed two new digital tax rules at the G20 summit last month.
Similar to the US based R3 consortium, the European Central Bank has experimented with the potential use of distributed ledger technology as a securities settlement mechanism since December 2016. Switzerland and Netherlands based financial groups have since successfully used R3’s Corda platform to transfer nearly $30 bln in securities, proving its commercial utility.
The list below is based on thorough news research, but should in no way be considered complete. If you have more detailed information on banks and the crypto relationship in your country, we encourage you to share it in the comment section.
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The UK Treasury established a cryptocurrency task force in March that aims to mirror the regulatory action of the US Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC). The task force, which comprises the Bank of England and the Financial Conduct Authority (FCA), is part of a larger strategy to facilitate crypto markets in the UK, especially as the country exits the EU.
The FCA also created a global fintech sandbox in March, which aims to promote collaborative fintech regulations and initiatives among global leaders.
The FCA, Britain’s financial watchdog, requires crypto firms to apply for e-money licensing before operating in the country. The FCA is primarily concerned with ensuring that licensed firms comply with regulations. Coinbase is the first firm to be granted an e-money license to work with Barclays and plans to make fiat exchanges more accessible in Britain.
Still, many analysts believe the FCA is seeking positive regulatory changes aimed to attract cryptocurrency investors to the UK, especially if European regulators pr