This week the European Central Bank (ECB) Governing Council member, Ewald Nowotny, stated in an interview that the ECB is discussing “legal restraints” for bitcoin and other cryptocurrencies.
Also read: Switzerland’s FINMA Eyes Crypto Valley
ECB Council Member Says Bitcoin Lacks Supervision
The ECB has said a lot of things about bitcoin over the past few years, and this week the Austrian economist and ECB council member Ewald Nowotny gave his opinions. Nowotny says the bank is currently looking into regulating decentralized currencies but did not detail what kind of mandates the institution would enforce. The European official believes bitcoin is too volatile and lacks in regulatory supervision.
“Bitcoin is not a currency, it is highly speculative and volatile, it is not subject to any supervision either, and the stock market movements of the recent period make it clear,” explains Nowotny speaking with the Austrian weekly trend report.
Nowotny: Stability Makes a Currency ‘Good’
It’s not the first time Nowotny has scrutinized bitcoin as the ECB council member has been very outspoken against the digital asset. “Bitcoin does not own the main feature that makes a currency good, namely – stability,” explains Nowotny this past July. “The cryptocurrency is subject to speculations,” he adds. However, at the time Nowotny explains that even though the bank wouldn’t ban bitcoin; retail investors should be “aware of the risks.”
Discussing Bitcoin Legal Constraints Within the ECB
Alongside this, last month the president of the ECB, Mario Draghi, told a European Parliament committee that “it would not be [within] our power to prohibit or regulate [bitcoin].” Draghi did detail to the committee members that the ECB hasn’t discussed the regulatory possibilities yet. But the ECB president did, however, reject the Estonian government’s plan to create its own sovereign cryptocurrency. The president told the country, “no member state can introduce its own currency — the currency of the eurozone is the euro.” Moreover, Draghi recently stated in a letter to the EU Parliament, that there is no evidence showing the current cryptocurrency economy is affecting the “real economy” in any positive way.
“Although the market capitalisation of [virtual currency schemes] has increased since the publication of these reports, there is no evidence to suggest that the connection of VCS to the real economy has strengthened significantly,” detailed the ECB president Mario Draghi.
Following Draghi’s recent statements, the ECB council member Nowotny explains during his recent interview that the bank is definitely considering placing regulatory mandates towards bitcoin.
“There is a particular problem in China, because bitcoins are used as a means to curse capital and to circumvent legal regulations,” details Nowotny. The Austrian economist then emphasizes;
We are discussing the legal constraints within the ECB.
Nowotny’s commentary, stating that the ECB is actively researching legal constraints follows in line with the European Parliament’s plan to tighten digital currency regulation this year. The European Union’s legislative initiatives are rumored to be delivered by the end of 2017.
What do you think about the ECB placing ‘legal restraints’ on bitcoin in Europe? Let us know what you think in the comments below.
Images via Shutterstock, and Wiki-commons.
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