A top EU bureaucrat wrote a letter to other regulators, pressing them to take action against recent developments in the cryptocurrency market.
As Bitcoin was reaching dizzying heights, regulators within the European Union kept sounding the alarm bells.
Now, at the moment that the cryptocurrency begins to fall in value, one of the top officials for the Euro started seeing red flags everywhere.
Valdis Dombrovskis, Vice President of the European Commission for the Euro and Social Dialogue, believes that the government has to act quickly to combat the volatility that cryptocurrencies are most known for.
“The developments relating to Bitcoin and cryptocurrencies in recent weeks require our heightened attention,” he wrote in a letter to other EU regulators.
According to Dombrovskis, agencies in the EU must come up with plans “as a matter of urgency” as a result of recent developments in the cryptocurrency space.
“There are clear risks for investors and consumers associated to price volatility—including the risk of a complete loss of investment, operational and security failures, market manipulation, and liability gaps,” he wrote.
The letter was sent in a moment that Bitcoin’s value began its roller coaster ride down to its current value of just under $12,200 a significant drop considering that just a few days ago it was flying close to the sun, at $20,000.
A sufficiently long trip down memory lane would remind us that this isn’t the first time that the cryptocurrency experienced such a strong freefall.
Just before the year 2013 came to a close, Bitcoin’s value experienced an immense spike towards $1,100 before falling through all of the next year to a value of $315 as 2015 came along.
We are unsure of what kinds of regulations the EU would have in mind to curtail the volatility that surrounds investment in cryptocurrencies.
Outside of warning investors, there’s not really much a government agency can do to attempt to control the flow of money through a decentralized ledger.
On the other hand, the EU also wishes to prevent cryptocurrency purchases related to illegal activities like terrorism financing and money laundering.
A few days ago, leaders within the governing body came to an agreement on rules regarding cryptocurrency exchanges that would require them to ask their users for proof of identity.