EU Officials to Discuss Cryptocurrencies, But Expected to Hold Fire on Regulation

Cryptocurrency regulation will be a topic of conversation among EU finance ministers this week, as representatives meet for a summit in Vienna on Friday and Saturday.

In a report due to be presented to the meeting, the Brussels-based think tank Bruegel calls on leaders of the influential countries to adopt a common rule on cryptocurrencies, especially in preventing the nascent technology from being exploited by criminals, Reuters reported citing unnamed sources.

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However, the report quickly shot down the likelihood finance leaders of Europe will issue a joint action on common digital currency rules as each of the bloc’s member countries have a varying approach to regulate the virtual asset.

Though few details have emerged about potential actions, remarks and statements from European officials suggest that they will be focusing on warning investors of the risks associated with cryptocurrencies, while maintaining support for the underlying blockchain technology.

But although no action is expected to follow at the summit, the finance chiefs have yet to agree on a common strategy to tackle the issue as some countries are wary of the cryptocurrency speculative nature.

This, however, pushes back the prospect of setting global rules on the matter, something that some regulators say is needed to tackle a phenomenon that transcends borders. In addition, it leaves the responsibility on local regulators to act, which give the opportunity for crypto industry’s players to game the rules by moving their operations to the more friendly jurisdictions.

The timing of the event is notable, given the increasingly adoption of the asset class in the United states. As Finance Magnates reported last week,  Cboe, the largest options and futures exchange in the US, is getting closer to launching Ethereum futures.

Rules vary but all regulators are cracking down

European leaders – including in France and Germany – have repeatedly called for more discussions on the topic. Rules vary wildly by country because of the lack of pan-European legislation. And while that may change after finance chiefs from the European Union’s 28 member states discuss digital assets next week, for the time being there’s a wide range of opinions on how best to regulate the space.

But overall, local regulators across Europe are cracking down on trading venues that lack permission to offer brokerage services. In this context, ESMA has already proposed restrictions on cryptocurrency CFDs for retail investors, including lowering the maximum leverage that companies can offer.

The European Union has previously proposed that cryptocurrency service providers be brought under the scope of its anti-money ‎laundering and countering terrorist financing regulations.‎

At the national level, the French government announced in April tax cuts on revenues generated by cryptocurrency transactions, reducing the high-band rate from ‎‎45 to 19 percent.‎

Concerns over cryptocurrency mining, trading and use in transferring money are shared by governments‏ ‏worldwide, so it makes sense to discuss the ‎speculative risks of digital assets and their impact on the ‎financial system at the continental level.‎