Only Global Rules Can Harness Bitcoin, Says European Bank Director
Joachim Wuermeling, a member of the board of Bundesbank, Germany’s central bank, says only global regulations will be useful in controlling cryptocurrencies. His January 2018 statement comes on the heels of the introduction of increased EU regulations on digital currencies in December 2017.
Controlling a Borderless Economy
“Effective regulation of virtual currencies would therefore only be achievable through the greatest possible international cooperation because the regulatory power of nation-states is obviously limited,” Wuermeling said at a January event. He expressed that the international, virtual nature of digital money makes national or local rules inefficient.
Many countries have been struggling for years to formulate ways to integrate, monitor and limit the movement of virtual currencies like Bitcoin within their borders.
Bitcoin’s rise in price to $20,000 in late 2017 thus spurred many governments to lance new restrictions on the popular digital financial ecosystem. The price has since fallen close to $10,000 as of January 18, 2018. Some fear this drop is due to the tightening of rules in many countries while others attribute it to other causes, including an annual pattern of price drops for the leading cryptocurrency, which has regularly occurred in the early months of the past few years.
In 2017, the EU adopted stricter regulations for virtual currencies in an attempt to crack down on their potential and suspected use in illicit activities such as the financing of terror organizations and money laundering. The new measures forbid anonymous transactions in cryptocurrency with pre-paid cards.
They also establish a requirement that companies providing wallets and exchange platforms will have to identify their users. The rules must now be adopted by EU states and made law within 18 months. Some EU states have opposed this tightening of crypto-guidelines, including Britain, Luxembourg, Malta, Cyprus, and Ireland.
After the new EU regulations were introduced, French Finance Minister Bruno Le Maire said in December that he would ask other G20 members to work with France to create joint guidelines of Bitcoin and other digital coins. The Italian government reportedly expressed interest in this option. The next G20 meeting is in Buenos Aires from late November into December.
Asia Rages On
In Asia, China has already banned ICOs and local exchanges, and South Korea has forbidden financial institutions from dealing with cryptocurrencies. South Korea is reportedly also considering a ban on trading, which spawned a 200,000-signature online petition from the public in favor of keeping crypto-trade legal.
In January, a senior Chinese banking official called for further restrictions to be placed on digital currency activities, which would affect mining, wallets and alternative trading platforms.