Crypto traders reeling from a week of losses are getting a soothing message from the European Union.
Finance ministers gathering in Vienna agreed that they won’t rush with steps to further regulate the market, and that they’ll wait for the outcome of a thorough analysis by European authorities before deciding on any steps, according to officials involved in the talks.
“The EU will be acting carefully in this area,” Irish Finance Minister Paschal Donohoe told reporters in the Austrian capital. Officials also sided with the view of the Financial Stability Board, which said earlier this year that crypto assets currently don’t threaten the financial system.
Regulators around the globe are taking steps to rein in one of the biggest investment manias in recent memory, ranging from a massive crackdown in China to an exchange-licensing regime in Japan. EU policy makers have moved to increase transparency in the market, yet have stopped short of introducing rules to protect investors or shield traditional financial firms from the risks posed by the crypto market.
Bruegel, a Brussels-based think tank, wrote in a report prepared for the ministers’ meeting that “limiting the exposure of financial institutions” to crypto-currencies would be “sensible.” It also said that it could be useful to try different national solutions in the EU before moving to a more harmonized approach with a single supervisor in charge.
The discussion in Vienna was meant to make sure that everyone understands the challenge and to ensure that policy makers are “put in a position in which they’re able to act,” said German Finance Minister Olaf Scholz. “It’s obvious that we shouldn’t wait too long with that.”
Cryptocurrencies took a hard dive this week, amid concern that broader adoption of digital assets will take longer than anticipated. Bitcoin, the largest cryptocurrency, is down 65 percent from its peak in late 2017.