Cryptocurrency & Blockchain Business

Germany joins French moves to regulate bitcoin

SPECULATIVE RISKS:G20 leaders are to discuss regulations for bitcoin, which some say can be used to hide illicit deals, after economists last month denounced the currency

Germany joined European governments pushing for global bitcoin regulation amid mounting alarm that the world’s most popular digital currency is being used by money launderers, drug traffickers and “terrorists.”

The German Federal Ministry of Finance said it welcomed a proposal by French Minister of the Economy and Finance Bruno Le Maire to ask his counterparts in the G20 to consider joint regulation of bitcoin.

The concerns are shared by the Italian government, which is also open to discussing regulation, while the EU is bringing in rules backed by the UK that would apply to bitcoin.

“It makes sense to discuss the speculative risks of virtual currencies and their impact on the financial system at an international level,” the ministry said in an e-mailed response to questions.

The next meeting of G20 finance ministers and central bank governors would be “a good opportunity to do so.”

Signs of growing European concern came as bitcoin took another step toward acceptability with the launch of futures trading on Sunday night at CME Group Inc’s venue.

That was a week after Chicago rival Cboe Global Markets Inc introduced similar derivatives on the volatile cryptocurrency that was created in the wake of the 2008 financial crisis as an alternative to banks and government-issued currencies.

Bitcoin on Monday was closing in on a fresh record of US$20,000.

Germany, Europe’s biggest economy, “monitors developments in the financial market very closely,” the ministry said. “This also applies to the current development of bitcoin.”

While Europe’s concerns have been voiced before in select forums about a currency that is stepping further into the mainstream financial world, Le Maire made those worries public in a weekend interview with France’s La Chaine Info TV.

“I don’t like it,” Le Maire said of bitcoin.

“It can hide activities such as drug trafficking and terrorism,” he said, adding that he has concerns for savers.

“There is an obvious speculative risk, we need to look at it, study it,” he said.

Italian Minister of Economy and Finances Pier Carlo Padoan would be ready to discuss Le Maire’s proposal, said a government official in Rome, who asked not to be named because the ministry has yet to receive any request from Paris.

EU lawmakers and representatives of the member states on Friday last week agreed on a revision of the bloc’s money laundering rules, extending the framework to firms that “are in charge of holding, storing and transferring virtual currencies,” the European Commission said in a statement.

These companies “will have to identify their customers and report any suspicious activity,” it added.

British Economic Secretary to the Treasury Stephen Barclay on Nov. 3 told lawmakers that new rules would “bring virtual currency exchange platforms and custodian wallet providers into anti-money laundering and counterterrorist financing regulation.”

For the British government, digital currencies “can be used to enable and facilitate cybercrime,” the British Treasury said in a note. “There is little current evidence of them being used to launder money, though this risk is expected to grow.”

“That is why these regulations will help,” it added.

Two Nobel economics laureates last month denounced Bitcoin.

Joseph Stiglitz said it should be outlawed, and does not serve “any socially useful function.”

Robert Shiller said the attraction of the currency was a narrative akin to a “mystery movie” that draws in people who want to outsmart the system.

The German Federal Financial Supervisory Authority (BaFin) last month warned of the risks of cryptocurrencies for consumers.

BaFin Chief Executive Director of Securities Supervision Elisabeth Roegele said in a Nov. 30 speech that regulation at a purely national level was not enough because of digital currencies’ international dimension.

“The Internet in particular does not know national borders,” Roegele said.

Source: taipeitimes.com

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