A prominent German politician has made the argument that Europe needs to ‘lead the way’ in regulating the cryptocurrency market.
Following a European Commission roundtable discussion on digital currencies today, Markus Ferber, vice-chair of the European Parliament’s Monetary Affairs Committee, said that ‘we need a quick EU-wide regulatory response,’ reports the Financial News.
His comments come at a time when global regulators have been issuing warnings about the potential dangers linked to the cryptocurrency market. Early last month, the U.S. Securities and Exchange Commission (SEC) and the U.S. Commodity Futures Trading Commission (CFTC) issued warnings to investors regarding the risks of digital currencies and initial coin offerings (ICOs) and that they may not be able to recover any money lost. In December, the CFTC also proposed regulations aimed at curbing unlicensed bitcoin futures in the country.
Right now, retail investors are losing money as they are not aware of the dangers of virtual currencies. In order to make sure that retail investors do not fall prey to market manipulation and fraud, virtual currencies should be regulated as other financial instruments.
In his opinion, Europe should lead the way and regulate the industry.
Ferber’s calls come as Valdis Dombrovskis, the EU’s financial chief, said today that if the risks associated with digital currencies are not addressed it will regulate the market. Speaking at a roundtable meeting attended by the European Central Bank (ECB), Dombrovskis stated:
This is a global phenomenon and it’s important there is an international follow-up at the global level. We do not exclude the possibility to move ahead (by regulating cryptocurrencies) at the EU level if we see, for example, risks emerging but no clear international response emerging.
Also in attendance were industry bodies and the Financial Stability Board, which writes and coordinates regulation for the G20 economies, reports the Guardian. In March, G20 finance ministers and central bankers will meet, with the topic of digital currencies on the agenda.
It’s believed that the regulation of cryptocurrencies will help to tackle money laundering and counter-terrorism, as they are brought into line with financial legislation.
Earlier this month, Daniele Nouy, the ECB’s chief supervisor, expressed the view that regulating the cryptocurrency market wasn’t a priority for the central bank. Whereas, Mario Draghi, chief of the ECB, has said in the past that the impact for the crypto market was ‘limited’ and that it didn’t pose a threat to the ECB. Notably, Draghi thinks that in the future European banks could hold positions in bitcoin.
Featured image from Shutterstock.