Germany Joins French-led Moves to Regulate Bitcoin
Germany joined European governments pushing for global bitcoin regulation amid mounting alarm that the world’s most popular digital currency is being used by money-launderers, drug traffickers and terrorists. Bloomberg reports in its article Germany Joins French-led Moves to Regulate Bitcoin at G-20 Level that Germany’s Finance Ministry said it welcomed a proposal by French Finance Minister Bruno Le Maire to ask his counterparts in the Group of 20 to consider joint regulation of bitcoin. The concerns are shared by the Italian government, which is also open to discussing regulation. “It makes sense to discuss the speculative risks of virtual currencies and their impact on the financial system at international level,” the Finance Ministry in Berlin said in an emailed response to questions.
The next meeting of G-20 finance ministers and central bank governors would be “a good opportunity to do so.” Signs of growing European concern came as bitcoin took another step toward acceptability with the launch of futures trading Sunday night at CME Group Inc.’s venue. That’s a week after Chicago rival Cboe Global Markets Inc. introduced similar derivatives on the volatile cryptocurrency that was created in the wake of the 2008 financial crisis as an alternative to banks and government-issued currencies. Bitcoin was closing in on a fresh record of $20,000 on Monday. The Finance Ministry in Germany, Europe’s biggest economy, “monitors developments in the financial market very closely,” it said. “This also applies to the current development of bitcoin.”
While Europe’s concerns have been voiced before in select forums about a currency which is stepping further into the mainstream financial world, Le Maire made those worries public in a weekend interview with France’s LCI television. “I don’t like it,” Le Maire said of bitcoin. “It can hide activities such as drug trafficking and terrorism,” and he has concerns for savers. “There is an obvious speculative risk, we need to look at it, study it,” he said.
Italian Finance Minister Pier Carlo Padoan would be ready to discuss Le Maire’s proposal, according to a government official in Rome who asked not to be named because the ministry has yet to receive any request from Paris. EU lawmakers and representatives of the member states meanwhile agreed on a revision of the bloc’s anti-money laundering rules Friday, extending the framework to firms that “are in charge of holding, storing and transferring virtual currencies,” according to a statement from the European Commission. These companies “will have to identify their customers and report any suspicious activity.” Stephen Barclay, Economic Secretary to the British Treasury, told lawmakers on Nov. 3 that new rules would “bring virtual currency exchange platforms and custodian wallet providers into anti-money laundering and counter-terrorist financing regulation.”
For the British government, digital currencies “can be used to enable and facilitate cybercrime,” according to a note from the Treasury. “There is little current evidence of them being used to launder money, though this risk is expected to grow,” the Treasury said. “That is why these regulations will help.” Two Nobel economics laureates denounced Bitcoin last month. Joseph Stiglitz said it should be outlawed, and doesn’t serve “any socially-useful function.” Robert J. Shiller said the attraction of the currency was a narrative akin to a “mystery movie” that draws in people who want to outsmart the system. Germany’s financial supervisor Bafin also warned last month of the risks of cryptocurrencies for consumers. Elisabeth Roegele, Bafin’s chief executive director of securities supervision, said in a Nov. 30 speech that regulation at a purely national level was not enough because of digital currencies’ international dimension. “The Internet in particular does not know national borders,” Roegele said.