The European Union, a politico-economic union of 28 European member states, has officially announced during a hearing on virtual currencies in the European Parliament that they are not interested in regulating digital currencies such as bitcoin just yet.
Over the past few months, the EU, in collaboration of international law enforcement agencies have dedicated a significant allocation of its operations in exploring the application of bitcoin in the dark web. Particularly, the organization has been investigating the use of bitcoin in purchasing illicit goods like weapons and drugs, and hacking groups like DD4BC which demanded ransoms in bitcoin.
“The operational activity, initiated by Austria, was supported by Europol’s European Cybercrime Centre (EC3) and the Joint Cybercrime Action Taskforce (J-CAT). Operational meetings were organised in The Hague to discuss and plan coordinated law enforcement actions against DD4BC,” said Europol.
Regardless of the growing number of “criminal” activities involving digital currencies including bitcoin, EU’s European Commision and its senior financial services official Olivier Salles stated that it is too early to impose various regulations and financial policies on bitcoin, as technologies are easy to fail when regulated.
“It’s easy to fail when you regulate, you can be too early and too late. From the European Commission’s perspective, we are more on the monitoring side,” Salles told a hearing on virtual currencies in the European Parliament. “We want to understand better what is happening,” he added.
As seen amid the implementation of bitcoin regulatory license BitLicense drafted by the New York Department of Financial Services, strict regulations and restrictions on the circulation of digital currencies and operations of startups could potentially lead to the closure and cessation of bitcoin startups and services in certain regions.
The EU however, believes that the digital currency has the potential to evolve into a highly disruptive technology which could transform the conventional finance sector. Jakob von Weizsaecker, a German center member of the European parliament further suggested organizations, government agencies and lawmakers to understand the blockchain technology before it becomes more commonly used.
OECD club of rich nations economist Sean Ennis also stated that peer to peer lending and decentralized technologies could enable industries to innovate and grow at a significantly faster rate.
“I am very modest about the potential for regulation,” Ennis said, mentioning the report of the International Monetary Fund on virtual currencies and the distributed ledger technology.
The IMF earlier this month released a report entitled “Virtual Currencies and Beyond: Initial Considerations,” to explore the unique use cases of bitcoin and possible regulatory policies that could be implemented worldwide.
“The development of effective regulatory responses to VCs is still at an early stage. VCs are difficult to regulate as they cut across the responsibilities of different agencies at the national level, and operate on a global scale. Many are opaque and operate outside of the conventional financial system, making it difficult to monitor their operations. Regulators have begun to address these challenges, with a variety of approaches across countries,” read a section of the report.
In the upcoming months, the EU will be monitoring several digital currencies, mainly bitcoin, and decide whether to draft a set of rules for digital currency operations and startups.