EU to Discuss Potential Cryptocurrency Risks
According to Bloomberg, economic and financial affairs monsters from the 28 member nations of the European Union will soon convene an unofficial meeting to discuss the challenges posed by crypto assets as well as the possibility of enacting stern regulations. Specifically, the Bloomberg report states that the matters to be discussed include the lack of transparency in the crypto transactions and the potential use of virtual currencies to conduct illicit activities such as tax evasion, money laundering, and terrorism, human and drug trafficking. The meeting will be held on 7th September in Vienna, Austria.
The EU has previously warned crypto investors of the potential risks of trading in such a volatile industry. Through the European Securities and Markets Authority (ESMA), the international body cautioned traders on ICOs, citing the insufficient understanding amongst investors and the challenges of unregulated financial institutions. The ESMA also added that digital exchanges that are unregulated are not protected by the law since they are recognized by the relevant authorizes. Therefore, if a client of such platforms loses their investment during attacks, they are not liable for a compensation by the EU.
Although the EU has been vociferously campaigning against ICOs, the Bloomberg report, apparently drafted by the EU, claims that ICO are an effective means of raising capital for startups. It further adds that ICOs could play a key role in the integration of capital markets into the EU.
Earlier in July, the EU Fifth Anti-money Laundering law became effective, enabling financial oversight authorities to impose strict regulations on digital currencies. Precisely, the new law prohibits the use of cryptocurrencies anonymously, as this broods illegal activities such as terrorism financing and money laundering. Also, in March, the ESMA enforced tough rules for Contract for Differences in virtual currencies. The new rule obligates investors to have at least half of contract value in funds before initiating the process.