The European Commission will assess whether new rules are needed against the “substantial speculation” of digital currencies, Commission vice-president Valdis Dombrovskis said on Monday (26 February).
Dombrovskis, who is in charge of financial services in the EU, said that “we don’t exclude moving ahead at EU level” if the bloc sees that there is not “clear response” at the international level to tackle the risks emerging from Bitcoin and the like.
The Latvian commissioner said that the executive would decide whether to act also based on the assessment by the European Supervisory Authorities of EU and national legislation to see if more rules are needed.
The ESAs are the EU regulators for banks, markets and institutional investors (insurance companies and pension funds).
The EU’s decision could come “later this year or earlier next year”, Dombrovskis told reporters after the conclusion of the first roundtable on cryptocurrencies held in Brussels.
The issue of cryptocurrencies is expected to be discussed during the ministerial G20 meeting in Buenos Aires (Argentina) next month.
Germany and France requested including this issue on the agenda. Both countries also believe that international organisations should play a bigger role in tackling the risks associated with the virtual currencies.
The commissioner recalled that the cryptocurrency market in Europe is “small” and for that reason, Europe needs to work with global partners.
Less than 5% of digital currencies, such as Bitcoin or Ethereum, are euro and other European currencies denominated trades.
These assets, powered by blockchain, have become one of the hottest products in the realm of fintech, financial services offered by tech-startups
Dombrovskis echoed concerns raised by the European regulators earlier this month, when they said the digital currencies were “highly risky products”.
“We see a lot of speculation, that is why I asked the ESAs to update the warnings,” Dombrovskis said and noted the increasing number of offerings in the market.
The former Latvian prime minister was particularly concerned about the “lack of transparency of issuers”.
“That is why it is important to have more in-depth discussions,” he added.
A total of 32 people participated in the roundtable in Brussels, including government officials, representatives from financial entities, and experts. The ECB’s Executive Board member Yves Merch and the Chairman of the European Banking Authority, Andrea Enria, also attended the meeting.
An EU source said that the participants recognised the “risks of volatility” and other vulnerabilities linked to these digital assets, including cyber attacks.
But the source added that “nobody” was in favour of coming up with new rules at this stage to limit cryptocurrencies trading.
The Commission has so far not included any measure to address the risks associated with the digital currencies in the action plan on fintech that it will present next month.
“The action plan is in a late stage of development,” said the commissioner.
EU officials recalled that new legislation deals with some of the potential challenges, for example, changes made to the anti-money laundering directive last year aimed at impeding the use of these assets for money laundering activities.