The European Parliament’s Economic and Monetary Affairs Committee (ECON) held a public hearing on Monday, January 25th 2016 on virtual currencies and the role of regulators.
The role of virtual currencies in abetting illegal activities such as money laundering and terrorism funding was the central idea discussed during the meeting.
The ECON policy-makers took a balanced and careful consideration of the impact of virtual currencies and crypto-technologies, taking into account both the advantages and underlying risks of using the technology.
Clearing the Misconceptions
Sean Ennis, Senior Economist at OECD spoke in favor of virtual currencies. He said that while many governments may have ruled virtual currencies out because of their possible use in illegal activities, virtual currencies are more secure in many ways than paper value; the negatives of virtual currencies being much weaker than the use of cash.
He also added that the EU could learn lessons from how Britain has maintained lower regulatory requirements for peer-to-peer lending, enabling the fledgling sector to innovate and grow much faster than in the rest of Europe.
“Blockchain delivers trust in an otherwise trustless realm. It is the ability to provide an incontrovertible single source of truth that cannot be altered or corrupted.The potential of this trust mechanism has not been missed by the public sector or private sector.”
She also added Cryptography offers a lot of transparency and as opposed to popular beliefs it is not anonymous but pseudo-anonymous, only having the appearance of being anonymous.
Monitor not Regulate
One of the policymakers at the hearing said: “As regulators, European Union is watching carefully whether there is a need to closely regulate Bitcoin and whether it can be used to fund terrorism or money laundering. After the Paris-attacks in last november, we want to ensure that virtual currencies are not used to fund terrorism.”
Olivier Salles, a senior financial officer at European Commission of the EU said that there are risks associated with virtual currencies like price volatility, platform stability, and cyber risks like theft and hacking, and added that he was in favor of monitoring these developments instead of proposing new rules.
Jeremy Miller from Magister Advisors said on the regulation of Blockchain technology:
"They are putting in regulatory capital, they are already registered with the regulators, by and large. If the companies and the activities are already regulated, I don't know what it means to regulate the technology".
The public hearing was a part of the process of preparing a report of the ECON committee. It remains to be seen what recommendations will the final report propose, if any.
Cointelegraph talked to Sian Jones of EDCAB, who was one of the speakers at the public hearing for comments. She had also talked to us earlier, telling us about what to expect from this hearing.
“Interestingly, there were no regulators at yesterday's hearing. The policy-makers on the panel and the legislators on the parliamentary committee seemed, largely, not to want to rush into legislative action and risk stifling innovation. However, the hearing is just the start of a process and we shall have to wait a few months to see what recommendations, if any, are made in the report. Of course, EDCAB will be continuing dialogue with all political groups and interested MEPs during the committee’s deliberations.”
When asked what to expect from the final report of the hearing, she added “Experience of EU institutions has taught me not to predict the outcome of reports. I think amendments to European anti-money regulations are likely. Harder to predict are systemic and consumer protection responses. The possibility of preventive measures is still a possibility. I do expect some recommendations in the final report.”