Germany on board the Bitcoin regulation train
Germany on board the Bitcoin regulation train
Despite, or perhaps because of, Bitcoin's increasing popularity, more and more countries are actively pursuing regulation efforts in a bid to control trading of the currency.
China and Russia have made their plans clear, with the EU also recently advocating regulatory processes. The latter has cited reasons that the currency could be used as the perfect medium of exchange for illicit and illegal undertakings such as to finance terrorism, aid in money laundering schemes and to support drug trafficking.
France’s Finance Minister, Bruno Le Maire, had previously requested that rest of the G20 follow the EU’s lead. Italy and the UK are on board, and now Germany is as well. The country feels that the issue should be discussed at the next G20 meeting.
Germany’s Finance Ministry says it is logical to contemplate the speculative risks attached to digital currencies, as well as how crypto does, and will, affect the international financial system. The country is Europe’s largest economy, with a keen eye on financial markets.
Bitcoin’s future trading on CME and CBOE is a step towards mainstream financial integration, but a point of concern for regulators.
The EU has proposed that revisions be made to existing anti-money laundering guidelines to include digital currency transfers made by organizations. These companies will have to identify their crypto traders and report suspicious activity to the relevant authorities.
The UK has also been critical of crypto and how it can supposedly aid in cybercrime. Even though evidence of money laundering through digital currencies is scarce, new regulations could prevent it completely in the future. Stephen Barclay, who is the economic secretary to the British Treasury, had previously said that crypto exchanges would be subject to new finance regulations to combat these crimes.
Bitcoin has plenty of detractors in the finance industry. Joseph Stiglitz, a Nobel economics laureate has made his stance clear by saying that the currency should be criminalized. A fellow economics laureate, Robert Shiller, has previously said that Bitcoin is a magnet for people who want to circumvent traditional systems.
In addition, Germany’s financial supervisor has said that regulation at a national level is futile as Bitcoin’s reach is global.
That is definitely true as Bitcoin and other cryptocurrencies are becoming more and more popular in emerging markets where the local currency is at risk of hyperinflation, or where the country’s coffers are controlled by cash-hungry government institutions.
Author : Jack Dean