Cryptocurrency regulation will be a topic of conversation among EU finance ministers this week, as representatives meet for a summit in Vienna on Friday and Saturday.
In a report due to be presented to the meeting, the Brussels-based think tank Bruegel calls on leaders of the influential countries to adopt a common rule on cryptocurrencies, especially in preventing the nascent technology from being exploited by criminals, Reuters reported citing unnamed sources.
However, the report quickly shot down the likelihood of European finance leaders issuing a joint action on common digital currency rules as each of the bloc’s member countries have a different approach to the assets.
Though few details have emerged about potential actions, remarks and statements from European officials suggest that they will be focusing on warning investors of the risks associated with cryptocurrencies, while maintaining support for the underlying blockchain technology.
But although no action is expected to follow at the summit, finance chiefs have yet to agree on a common strategy to tackle the issue as some countries are wary of the speculative nature of cryptocurrency.
This, however, pushes back the prospect of setting global rules on the matter, something that some regulators say is needed to tackle a phenomenon that transcends borders. In addition, it leaves the responsibility on local regulators to act, which gives the opportunity for crypto industry players to game the rules by moving their operations to friendlier jurisdictions.
ACY Securities Supports ASIC’s Product Intervention OrderGo to article >>
The timing of the event is notable, given the increasing adoption of the asset class in the United states. As Finance Magnates reported last week, Cboe, the largest options and futures exchange in the US, is getting closer to launching Ethereum futures.
Rules vary but all regulators are cracking down
European leaders – including in France and Germany – have repeatedly called for more discussions on the topic. Rules vary wildly by country because of the lack of pan-European legislation. And while that may change after finance chiefs from the European Union’s 28 member states discuss digital assets next week, for the time being there’s a wide range of opinions on how best to regulate the space.
But overall, local regulators across Europe are cracking down on trading venues that lack permission to offer brokerage services. In this context, ESMA has already proposed restrictions on cryptocurrency CFDs for retail investors, including lowering the maximum leverage that companies can offer.
The European Union has previously proposed that cryptocurrency service providers be brought under the scope of its anti-money laundering and countering terrorist financing regulations.
At the national level, the French government announced in April tax cuts on revenues generated by cryptocurrency transactions, reducing the high-band rate from 45 to 19 percent.
Concerns over cryptocurrency mining, trading and use in transferring money are shared by governments worldwide, so it makes sense to discuss the speculative risks of digital assets and their impact on the financial system at the continental level.