New line for crypto-currency in the EU: Test for Bitcoin and Libra
The EU does not want to ban the new crypto-currencies, but wants to subject them to the same strict rules as traditional banks and tech companies.
Paying a forgotten invoice from Munich to Hamburg in real time is no longer a problem. To transfer the same amount to Innsbruck, which is much closer, can take days. Against this reality, the European Commission is setting its plans for new rules on the financial market. “The future of the financial sector is digital,” said Commission Vice-President Valdis Dombrowski in Brussels. “We want to actively shape the digital transformation process while minimizing potential risks.
The European Union wants to promote new financial instruments
Actually crypto currencies are meanwhile world-wide common and conquered a considerable billion market, move however at least in a legal grey zone. That is starting point and motivation at the same time, why the European community with the rules presented now is rising to the world-wide pioneer for the regulation of digital currencies such as Bitcoin and Libra from the house Facebook. New financial instruments should therefore not be prohibited, but rather promoted as innovations, Brussels said. The plan is to subject providers to the same competitive conditions as traditional banks or other technology companies.
The motto is: “Same activities, same risks, same rules”. The operators of so-called crypto-currencies must therefore be licensed within the EU and also offer their services throughout the entire community. The principle will apply here: Whoever has been registered in one state will have an operating license in the entire Union. The safety precautions for the enterprises correspond to those of the analogous financial houses: Equity capital must be available to the same extent. Assets are to be held in safekeeping. A mandatory complaints procedure is necessary for investors, and every customer will have the same rights vis-à-vis the issuer as he has with his traditional house bank. The digital association Bitkom spoke of “good chances” for the new currencies such as Bitcoin, Libra & Co. The prerequisite for this is that “the EU harmonizes the existing regulation and
Bitcoin: Use only with high security precautions
First, however, a pilot project, known as the “sandbox concept”, will examine how transactions with digital financial instruments can be made and processed. This is the interface to accelerated transfers within Europe. The Commission sees the speedy processing of transfers as a way of curbing an all too pronounced triumphant advance of currencies such as Libra. Customers would benefit.
In fact, the EU is the first major economic area to create a binding legal framework within which the new money can be used. According to experts, whether this works will also depend on whether the security requirements for providers can be raised to such a high level that cyber theft, hacker attacks, money laundering and other forms of crime are largely ruled out. In addition, consumer protection must be expanded and all liability issues must be clarified. Exactly these doubts had so far also the Federal Government as well as four further European Union states expressed and therefore first against an admission of crypto currencies spoke themselves.
Facts about Bitcoin
The targeted scarcity of the money supply is inspired by the former gold standard and is intended to protect against inflation.
- The Bitcoin is a digital currency that originated on the Internet – and is highly controversial.
- The Bitcoin has been around since 2009 and the concept was created by a character named Satoshi Nakamoto. Who exactly is hiding behind it is a mystery.
- Bitcoins are virtual monetary units whose value is not linked to any other currency. However, they can be bought on the net with Euro or Dollar.
- The idea behind the “Bitcoins” is a payment system that works independently of governments and banks.
- Users can create Bitcoins themselves by solving highly complex mathematical formulas on a computer with high computing power. The process is called “mining” in the technical jargon.
- Production is expected to stop at 21 million Bitcoins in 2033. So far, slightly more than twelve million have been produced.
- The targeted scarcity of the money supply is inspired by the former gold standard and is intended to protect against inflation.
The first reactions were quite positive
MEP Markus Ferber (CSU), financial expert of the Christian Democratic Group, commented on the initiative with the words: “It is appropriate that products such as Libra, which pose a particular risk to financial stability, are also subject to particularly strict regulation. Socialist MEP Joachim Schuster stressed: “The objectives of the new agreements must be to protect economic stability and taxpayers’ money as well as the interests of small investors, pensioners and consumers.