Category Archives: European Parliament’s Committee on Economic and Monetary Affairs

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EU Latest: Crypto ‘Unlikely’ to Threaten State Currencies

An EU body, the European Parliament’s Committee on Economic and Monetary Affairs, released a statement on 26 June saying that it saw cryptocurrencies as no threat to state currencies globally.

The Committee on Economic and Monetary Affairs is a committee of the European Parliament, the most important function of this committee being in relation to the European Central Bank.

In the committee’s most recent analysis it suggested that not only were they perceived as no threat to sovereign currencies, but they were viewed as being “relatively safe, transparent, and fast”.

The report was initiated by the EU and conducted by the Center for Social and Economic Research, a non-profit research institute based in Poland. The report clearly acknowledges the useful role of cryptocurrencies internationally and suggested that they had the capacity to become “fully fledged private money in the future due to their growing global adoption”.

The key point of the analysis was cryptocurrency’s potential to disrupt global banking systems. The committee pointed out that although public demand was now significant, it was unlikely that this would undermine central banking structures, particularly in countries where national currencies were widely circulated.

The last point is significant given the current disruption to the banking system in countries such as Venezuela where rampant inflation has lead to the adoption of the Petro, while Bitcoin has become the underground currency of choice.

The report concluded that the total value of all cryptocurrencies in circulation was insignificant when juxtaposed with the value of major world currencies. The committee issued the usual warning concerning the risk of cryptocurrency being used for money laundering, tax evasion, and financing illicit activities.

To this end, the latest regulatory development from the EU is ‘Directive (EU) 2015/849’ which allows Financial Intelligence Units to access cryptocurrency wallet information should there be a suspicion of illegal activity. Such units will thereby be able to establish the ownership of crypto addresses.

Last month, an EU parliamentary think tank concluded that cryptocurrencies presented no more of a threat to terrorist financing than fiat currencies, while improved regulations, industry intelligence, and community relationship building offered the strongest policy actions to combat the threat.

 

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