Category Archives: Christine Lagarde

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Crypto to Come Under Microscope at Vienna EU Talks

The EU is ready for its next round of talks with the 28 member states ready to discuss digital assets and whether further legislation is needed.

The next round is scheduled to be held in the Austrian capital Vienna on 7 September and is said to include certain issues surrounding cryptocurrencies such as money laundering, tax evasion and terrorist financing, all subjects which have been of concern to EU legislators over recent years.

It’s thought that the focus on money laundering, tax evasion and terrorist financing planned for Vienna has been motivated in part by concerns that EU laws don’t provide enough protection to investors, particularly in light of Asian moves to tighten regulation following hacking incidents this year. Also, the fact that unregulated exchanges fall outside of global financial regulations has caused some extra concern.

It should be acknowledged that while these concerns continue to dominate EU discussions, it has been noted by the both the European Commission and the International Monetary Fund (IMF) that both digital currencies and blockchain technology can bring great benefits to capital markets and commerce in general.

Regulators in Europe are also keen on harnessing the new technologies unleashed by digital currencies, according to the updated document. Initial coin offerings “have established an effective and efficient way to raise capital”, it said, adding that this development could also help integrate capital markets in the bloc.

French finance minister Bruno Le Maire recently described cryptocurrency as a “revolution”. Income tax on crypto has been axed by the French government and former French finance minister Christine Lagarde, now IMF head, described future international digital currency regulation as “inevitable”.

Lagarde said that not only could Bitcoin enable fast and inexpensive transactions but that the underlying technology behind cryptocurrencies, blockchain, could make financial markets safer.

Other states have made positive comments with the German federal government stating that cryptocurrencies don’t pose any threat to financial stability and the UK’s Financial Conduct Authority (FCA) announcing the launch of a collaborative entity, the Global Financial Innovation Network (GFIN).

An EU document obtained by Bloomberg says that ICOs “have established an effective and efficient way to raise capital”. The document reportedly also states that ICOs could help integrate capital markets in the EU.

 

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Germany Says Bitcoin No Threat to Financial Stability

The German Federal Government has stated that cryptocurrencies do not pose a threat to financial stability, reports Cointelegraph.

The government stated on 12 June that the volume of cryptocurrencies, when juxtaposed to the overall size of the German financial system, is comparatively low and, therefore, simply needs careful monitoring and regulatory measures put in place in order to control the space. This assessment is a view generally shared by the G20, of which Germany is a significant member state.

The statement was made in reaction to a parliamentary inquiry from the Euroskeptic right-wing Alternative for Germany Party who cited alleged problems including money laundering, illegal revenue, use of such currencies in online gambling and terrorist financing. It backs the government’s national risk analysis scheduled for next year. The government stated:

“In order to address the risks of Bitcoin and other “cryptocurrencies”, there are already important regulations in Germany: for example, German-based crypto traders must follow the same anti-money laundering regulations as other financial service providers – especially when it comes to identifying customers.”

Once again, the German government has expressed the necessity for careful international controls on cryptocurrency, noting that the Federal Financial Supervisory Authority (BaFin) will oversee any new legislation:

“… there is a need for coordinated action at European and international level. The Federal Government is, therefore, pressing for a harmonized handling of crypto-tokens at this both levels.”

The federal government’s current view reflects the recent International Monetary Fund (IMF) position on cryptocurrencies, which is that it also considers that cryptocurrency is no threat to global financial stability, providing that it is carefully monitored to protect users.

In March this year, IMF chief Christine Lagarde expressed positive outcomes for the crypto space, stating: “Just as a few technologies that emerged from the dot-com era have transformed our lives, the crypto assets that survive could have a significant impact on how we save, invest and pay our bills.”

Lagarde calls for an even-handed approach which will both exploit the benefits of the new technology and minimize the risks in using and trading cryptocurrency, clearly a view shared by German legislators.

 

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IMF: Fiat Needs New Ideas to Compete with Crypto

Fiat currencies need work, according to an International Monetary Fund (IMF) official, suggesting that they need new ideas to make them more of an attractive proposition for users in the “digital age”, according to Cointelegraph.

Dong He, IMF’s Deputy Director of the Monetary and Capital Markets Department, has published an article suggesting that the way to make fiat currencies “more attractive”, and, thereby, more competitive in the light of potential competition from cryptocurrencies, require three main areas needing improvement.

Dong said that fiat currencies, in the hands of central banks, need to become “more stable units of account” with fresh ideas, referring back to an earlier statement by IMF Managing Director Christine Lagarde who claimed that “…the best response by central banks [to crypto] is to continue running effective monetary policy while being open to fresh ideas and new demands, as economies evolve.”

IMF boss Lagarde has developed a positive, if not guarded, approach to cryptocurrency development in past months, according to an earlier report by Bitcoin News. In the last weeks, the French lawyer commented in an official IMF blog post that both “crypto-condemnation” and “crypto-euphoria” should be substituted by taking a clear-minded and rational approach to the regulation of cryptocurrencies. She wrote:

“Just as a few technologies that emerged from the dot-com era have transformed our lives, the crypto-assets that survive could have a significant impact on how we save, invest and pay our bills. That is why policymakers should keep an open mind and work toward an even-handed regulatory framework that minimizes risks while allowing the creative process to bear fruit.”

Dong echoed Lagarde’s view that regulation is necessary but added that it necessitates a way of ensuring that a soft- handed regulation of cryptocurrencies would give them an “unfair competitive advantage” and that this should be avoided. He said, “That means rigorously applying measures to prevent money laundering and the financing of terrorism, strengthening consumer protection, and effectively taxing crypto transactions.”

The deputy director went on to say that the issuing of a CBDC could reduce transaction costs for individuals and small businesses as well as allow long-distance transactions. This he said would make “central bank money user-friendly in the digital world by issuing digital tokens of their own to supplement physical cash and bank reserves”.

In March, Lagarde said that crypto markets must be regulated by the same laws that apply to traditional markets and that regulations must be developed on a global scale with help from the IMF.

 

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Regulation and Innovation, a Crypto Future in France

French finance minister Bruno Le Maire recently described cryptocurrency as a “revolution”; income tax on crypto has been axed  by the French government, and former French finance minister Christine Lagarde, now IMF head, described future international digital currency regulation as “inevitable”.

Lagarde even expressed interest in the creation of an IMF cryptocurrency last year, after comments she made about the benefits of weaker economies having their own digital currencies.

With such apparent Gallic positivity, where then, is France at this moment in time in its journey down the blockchain and crypto trail, and what lies ahead in the future?

A recent report in Coin Telegraph suggests that France is in a good position for more leadership in the crypto industry, providing that clarification of current rules is established and new legislation is brought to bear.

According to Jonathan Klein, president at Tresorio, a French-based blockchain mining and trading company, Emmanuel Macron was ahead of his peers launching discussions within France with other members of the crypto community even before his election as president. In 2017, Macron, as minister of the economy, passed a bill authorizing what could become a blockchain mini market. Klein also suggests that as a former banker and technophile, Macron could be at the forefront of driving cryptocurrency in France.

Likewise, Le Maire’s comments in Buenos Aires earlier this year, saying that “France will not miss the blockchain revolution” indicates that there is genuine interest at the highest level to continue to develop and regulate the space to promote, rather than curb, the new technology.

Clearly, the French government has not been static on the subject of regulation. In recent months a decree was published by the government related to the possibility of transferring financial securities through a blockchain. A government cryptocurrency working group was formed and new tax guidelines governing cryptocurrency were formulated.

ICOs have also been under the microscope. William O’Rorke, legal advisor at Blockchain Partner, explains:

“France is about to introduce a completely novel framework for ICOs: a voluntary visa system that incorporates much of the ‘best practices’ advocated for by the French crypto-industry. ICOs that comply with these best practices will thus be able to apply for official approval by the regulator.”

He continues, “As of today, simple things like opening a bank account can prove difficult for crypto-projects.” O’Rorke argues that the visa system will enable ICOs to interact simply with institutions such as banks who elsewhere might be overprotective to towards the client in case of cryptocurrency transactions, such as in the US.

France has recently been described as one of the most forward-looking governments in Europe. The French government’s latest announcement, to lower the tax rate for gains generated by cryptocurrencies, seems to indicate that France has set its path towards adapting to what lies ahead in the coming years, as it moves towards finding the right regulatory processes for the country’s crypto future.

 

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