BRUSSELS (Reuters) – the European Commission is considering whether the European Union has rules for cryptoassets of, and trade in, virtual currencies, the EU member states are moving ahead with their own regulations, with the smallest of them, Malta, is leading the pack.
FILE PHOTO: Virtual currency Bitcoin tokens are shown in this image figure 8 December 2017. REUTERS/dado Ruvic/Image/File Photo
The risks of investing in the industry were made clear last year, when Bitcoin, the most successful cryptocurrency, lost three-quarters of the value of a peak around $20,000 in late 2017. The market capitalisation of cryptoassets has fallen to $110 billion at the end of January of $ 830 billion a year earlier.
These market developments have occurred in a “legal vacuum”, said Robert Whole, the head of France’s financial regulator. Speaking at a financial-technology conference in Brussels, he urged the EU Commission to bring forward proposals for new regulations to control the risks.
In the last month, EU regulators called for new rules to prevent money laundering and the protection of investors. But the Commission, the only source of new EU legislation, so far has avoided taking action, afraid it will hamper the nascent industry.
“We must ensure that our financial sector rules do not inadvertently inhibit useful innovation,” said financial services commissioner, Valdis Dombrovskis. Brussels was still investigating whether EU action was required, he said.
The individual EU member states in the vacuum, despite the risks that uncoordinated action could weaken the EU market. The French parliament is the passing of cryptoassets legislation, and the German ministry of finance has started a consultation on a blockchain strategy which will be published before the summer.
Smaller states are for them. Luxembourg passed to the rules this year, and the Baltic countries have long been active in the industry industry consultant Peter Moricz said.
The bravest, Malta has a broad legal framework and aims to become Europe’s cryptohub.
“We are the first EU jurisdiction to have a complete framework that provides all key areas of risk: the risks to consumers, market integrity, financial crime and cyber security,” Joseph Cuschieri, the head of the Maltese financial regulator, said the Brussels conference.
The island in the Mediterranean sea is already home to the EU is the biggest online gambling industry and a large financial sector, which have been drawn out by advanced regulation and low taxes.
But these successes have partly been marred by foreign studies of different casinos and banks on the island have exposed the weak enforcement by the local authorities.
“As a result of these failures, we have learned how to strengthen our supervision,” said Christopher Buttigieg, a top regulator at the Malta Financial Services Authority.
Reporting by Francesco Guarascio, editing by Larry King