Bitcoin: cryptocurrency is critisized by the European Banking Authority

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Bitcoin-cryptocurrencyBitcoin was criticized by the European Banking Authority which reported that the risks of using digital currencies would outweigh the potential benefits. The EBA had concerns associated with Bitcoin, namely regulatory and anti-money laundering issues. The European regulator suggested cryptocurrencies to be declared ‘obliged entities’, which will have to abide by anti-money laundering legislation. According to the EBA representative, should a full-scale regulatory regime be put in place ‘it would have to include governance requirements for market participants, segregation of client accounts, capital requirements on virtual currency players, and the creation of so-called ‘scheme governing authorities’ that are accountable for the integrity of a virtual currency’. The EBA was sceptical the benefits of Bitcoin could match up to the alleged virtues of its own regulations and directives. ‘While there are some potential benefits of VCs, for example reduced transaction costs, faster transaction speed and financial inclusion, these benefits are less relevant in the European Union, due to the existing and pending EU regulations and directives that are explicitly aimed at faster transaction speeds and costs and at increasing financial inclusion,’ said the EBA. The EBA has previously warned that ‘no specific regulatory protections exist in the European Union that would protect consumers from financial losses if a platform that exchanges or holds virtual currencies fails or goes out of business’. However, Bitcoin advocates see its potential reaching further than cutting transactions costs or streamlining e-commerce and stand for using and promoting the cryptocurrency stating that regulatory and anti-money laundering issues will be resolved in due course.