iNVEZZ.com, Friday, July 4: The European Banking Authority (EBA) today called on the region’s banks not to deal in digital currencies such as Bitcoin until a system of rules to prevent abuses is developed.
The EU’s top banking watchdog said in a statement that it had identified more than 70 risks related to trading in virtual currencies and advised European financial institutions against “buying, holding or selling virtual currencies while no regulatory regime is in place”.
“A regulatory approach to address these risks would require a substantial body of regulation, some components of which would need to be developed in more detail,” the regulator added.
Following the EBA’s announcement, the European Commission signalled today that it would try to impose rules on virtual currencies.
“It’s imperative to move quickly on this issue,” Chantal Hughes, a spokeswoman for Financial Services Commissioner Michel Barnier, said today in an e-mail, as quoted by Bloomberg. “The potential for money laundering and terrorist financing is too serious to ignore.”
The EBA’s statement is bad news for Bitcoin, which enjoyed a short respite earlier this week after the Russian central bank softened its stance on virtual currencies as its first deputy chairman Georgy Luntovsky said that these instruments “should not be rejected” (BTC/USD: Russian central bank eases stance on Bitcoin). In February the Bank of Russia warned that the use of Bitcoin for buying goods, services or real currencies would be viewed as a potential involvement in dubious operations and financing terrorism.
Simon Dixon, a director of the UK Digital Currency Association told Bloomberg that the EBA’s announcement was “not very helpful” and might only deter individual users of virtual currencies.
“Banks are not engaging with digital currencies yet as it is a person-to-person network that operates outside of banking,” he observed. “The more likely result of the announcement is to scare people from using digital currencies rather than banks.”
At the time of writing, BTC/USD was trading 1.4 percent lower at $631.88.