The importance of virtual currencies and its underlying blockchain technology is being recognized by the European Union, resulting a favorable outlook towards the cryptocurrency industry by the European Parliament. The recent report published by the European Parliament stands as an evidence of its stance towards virtual currencies.
The opinion report on virtual currencies and virtual currency technology was published by the Committee on the Internal Market and Consumer Protection last week. The report is meant for the consumption and consideration by the European Parliamentary Committee on Economic and Monetary Affairs.
In this report, the Committee on Internal Market and Consumer Protection clearly points out the various advantages of virtual currencies, with an intention of influencing any future virtual currency regulations drafted by the Economic and Monetary Affairs Committee, applicable for the European union.
Most of the points contained in the report are already well-known to the cryptocurrency community. But this piece of official communication will be helpful in influencing the officials concerned with drafting and implementation of virtual currency legislation on behalf of digital currency users and the consumers in general.
Some of the points listed in the report are as follows –
- Virtual currencies and the technology behind it are still in its early stages of growth and development. Being a relatively new technology, it can’t be compared with any other existing conventional technologies. The digital currency is known of offer lots of benefits to consumers, businesses, charities and even the world economies. The virtual currency technology is known to promote faster transaction times at lesser costs in comparison with conventional fund transfer methods.
- The virtual currency technology has the potential to offer alternative financial services to the unbanked and the underbanked, promoting financial inclusion to all. In addition, it is also a great influence on small and medium scale enterprises by providing them access to funding and financial resources.
- until now, the associated costs for micropayments using conventional financial methods has been impossible. But it is now possible with virtual currencies as the transaction fees associated with them are negligible. The same feature also enables profitable cross-border transactions, where the recipient will be able to receive almost 100 percent of the funds transferred, without any cross border transaction fee and foreign exchange conversion fee.
- The use of blockchain technology is now being contemplated by almost all industry sectors, with banking and financial sectors in the forefront. The same technology can be leveraged upon by the government and public service sectors as well, provide fast and more efficient services to the citizens of European Union by implementing smart contracts and encouraging virtual currency transactions.
- Even though there have been concerns about the use of virtual currencies and its underlying technology for illegal activities, there isn’t enough evidence to support these concerns, so it will be premature to conclude that virtual currencies pose a significant threat to the law and order.
- At the same time, there are reports of virtual currency users being targeted by scamsters and hackers. So, instead of regulating the digital currencies, the government should work on implementing adequate safeguards to protect the interests of digital currency users.
In addition, the committee also recognizes some of the threats virtual currencies can pose to the country’s economy as its usage increases among people. Concerns about increased volatility of digital currencies are also covered in the same report.
In spite of all these arguments, it is difficult to predict the outcome of digital currency revolution and any long-term regulatory policies created by the government and the lawmakers at this point may end up stifling innovation in the sector. Keeping the potential benefits of virtual currency technologies in mind, it is important for the governments to create a favorable atmosphere for innovation in the sector while keeping an eye the development.
Instead of introducing more stringent laws, it will be more sensible to create awareness about the digital currency sector among the masses. Any laws and regulations on virtual currencies, either created by the European Union itself or its member nations, should consider all the factors mentioned in the report and gain a complete understanding of the virtual currency and blockchain technology before going ahead with it.
This is one of the most comprehensive report created about the future of digital currencies and the things that needs to be considered before implementing digital currency regulations. Whether this report will create enough impact to influence the Economic and Monetary Affairs committee in its decision about digital currency regulations is something only time will tell.
Ref: European Parliament Report | Image: EIPA