On February 26, 2018, European Commission vice president Valdis Dombrovskis hosted a roundtable discussion entitled "Cryptocurrencies – Opportunities and Risks." Participants included the European Central Bank, the Financial Stability Board, and cryptocurrency entrepreneurs, among others.
The themes of the meeting included:
- Cryptocurrencies and their implications for financial markets;
- Investor protection and market integrity in relation to cryptocurrencies as an emerging asset class; and
- The potential and challenges posed by initial coin offerings (ICOs).
Dombrovskis called cryptocurrencies a "global phenomenon," explaining that "it's important there is an international follow-up." He added, "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."
In his remarks, Dombrovskis highlighted the joint Franco-German letter which urged G20 discussion of cryptocurrency. The countries' finance ministers and central bank governors had asked Argentina (this year's leader of the G20) to help focus discussion on cryptocurrencies.
"On its own, Europe represents only a small share of global cryptocurrency trading, so we need to work together with our partners in the G20 and international standard-setters," said Dombrovskis.
These were the conclusions reached by today's roundtable, according to Dombrovskis.
On Blockchain Technology:
- "Blockchain technology holds strong promise for financial markets. To remain competitive, Europe must embrace this innovation."
- "Cryptocurrencies, which are not currencies in the traditional sense, and whose value is not guaranteed, have become subject of considerable speculation. This exposes consumers and investors to substantial risk including the risk to lose their investment."
- "Warnings about these risks to consumers and investors are important: these must be clear, frequent, and across all jurisdictions."
On Initial Coin Offerings:
- "Initial Coin Offerings have become a way for innovative firms in this field to raise substantial amounts of funding. This is an opportunity, but there are also problems that expose investors to substantial risk, such as the lack of transparency regarding the identity of the issuers and underlying business plans."
- "We need to assess further under what circumstances cryptocurrencies and related services are covered by existing regulation. This depends very much on the facts and circumstances around specific crypto-tokens."
- "Crypto-assets present risks relating to money laundering and the financing of illicit activities. That is why the Commission proposed that virtual currency exchanges and wallet providers should be subject to the Anti-Money Laundering Directive."
The VP's call for cautious facts and circumstance analysis parallels BaFin's advisory letter on token regulation, published last week. In all, Dombrovskis determined, "Based on the assessment of risks and opportunities and the suitability of the existing regulatory framework for these instruments, the Commission will determine if regulatory action at EU level is required."
Earlier this month, ETHNews reported on a consumer warning regarding cryptocurrencies published by the European Supervisory Authorities, a branch of the European System of Financial Supervision.