European Central Bank (ECB) president Mario Draghi stated that the agency does not have the authority to regulate bitcoin and other cryptocurrencies.
ECB Does Not Have Authority to Regulate Bitcoin
Draghi made these comments in a meeting of the European Parliament’s Committee on Economic and Monetary Affairs. Although Draghi’s formal statement did not address cryptocurrency, a committee member asked him to reveal what approach the ECB intends to take toward cryptocurrencies, in light of China’s recent ban on initial coin offerings (ICOs), as well as more conciliatory stances from Japan and Mexico, among others.
Draghi replied that the European Central Bank has not yet discussed the implications of cryptocurrency. However, he said that if it later decided to analyze the risks of digital currency, the bank would take the same approach as with all financial innovations: examine the technology’s scale, usage, and impact on the European economy.
He added that it is not within the ECB’s powers to prohibit or regulate bitcoin.
“Certainly it’s not within our powers to prohibit or to do something of the nature…or to regulate” bitcoin,” he said, “but we didn’t have a discussion on an institutional view of” cryptocurrency.
He added that the ECB’s greatest fear with cryptocurrency and other FinTech projects is the risk of cyber attacks. This latter comment reinforces a recent statement from the European Commission announcing the creation of a pan-European Cybersecurity Agency.
Included within the agency’s directives will be a mandate to “strengthen the ability of law enforcement authorities to tackle [monetary fraud] by expanding the scope of the offences related to information systems to all payment transactions, including transactions through virtual currencies.”
Governments Clarify Positions on Cryptocurrency
Although Draghi declined to issue specific guidance on cryptocurrency usage, many governments have begun to clarify their positions on the growing digital currency ecosystem. China has adopted a strict stance toward cryptocurrency, as evidenced by its blanket ban on initial coin offerings and bitcoin exchanges. Others, however, have been more accommodating.
Earlier this year, Japan adopted cryptocurrency-friendly regulations that have led to a surge in bitcoin adoption within the country. Mexico is working on regulations intended to help the FinTech industry grow at a healthy pace. Malaysia is also reportedly planning to legalize and regulate digital currency usage, potentially introducing millions of new users into the cryptocurrency community.