Bitcoin’s skyrocketing price has triggered a wave of warnings from regulatory institutions. The European Central Bank (ECB) has implored the European Union (EU) to regulate bitcoin, whilst the Associated Chambers of Commerce and Industry of India (ASSOCHAM) has urged India’s government to take legislative action against bitcoin. The highly anticipated launch of institutional bitcoin futures markets has also prompted the Hong Kong Securities and Futures Commission (SFC) to warn traders of the risks posed by trading unregulated bitcoin futures markets.
Record Prices Prompt Regulatory Warnings Regarding Bitcoin
With bitcoin seemingly establishing new all-time highs every second day, a number of institutions are pushing for greater regulatory action on the part of governments.
Earlier this week, Ewald Nowotny, a member of the ECB’s governing council and the governor of Austria’s central bank, urged the European Union to develop bitcoin regulations. Mr. Nowotny stated: “Simply because of the scale, it is certainly increasingly necessary to discuss whether and in what form regulations are needed here,” adding “A particular aspect that needs to be discussed…is the question of how far the regulations on money laundering…are relevant here.”
Mr. Nowotny reiterated the position that regulating bitcoin falls outside of the legislative Futures Markets and Record Prices Spark Regulatory Warningspurview of the ECB, emphasizing that it will be up to the EU to develop a regional juridical apparatus for the cryptocurrency. “Ultimately, we must settle this at the European level,” Mr. Nowotny stated.
ASSOCHAM Advocates ICO Ban
The Chamber Secretary of The Associated Chambers of Commerce and Industry of India, General D S Rawat, has urged India’s regulators to develop a policy framework for bitcoin. General Rawat expressed concerns pertaining to the ecological impact of bitcoin mining, and also asserted that Indian startups are increasingly becoming attracted to initial coin offerings (ICOs) as a vehicle for the raising of funds – urging that regulators move to ban ICOs.
“Until the government decision comes with either yes or no, the ICO’s should be immediately banned otherwise financial frauds will go on. India should take a call to lead at international level by opposing China for power supplies to Bitcoin miners which is causing massive emission of Carbon and is also posing a consequential threat to the environment.”
The Hong Kong Securities and Futures Commission Warns Against Trading Unlicensed Bitcoin Futures
Hong Kong’s SFC has issued a document warning traders against using unlicensed third parties as an intermediary through to trade bitcoin futures.
The document states “Bitcoin Futures have been or will soon be launched by certain well-established futures and commodities exchanges in the United States which are regulated by the U.S. Commodity Futures Trading Commission and authorized by the Securities and Futures Commission (“SFC”) to provide automated trading services. Hong Kong investors may be able to trade in Bitcoin Futures through an intermediary which is a member of these exchanges…The industry is reminded that a party is required to have an appropriate license with the SFC if it provides any other business services relating to Bitcoin Futures which constitute a ‘regulated activity’. This is irrespective of whether the party is located in Hong Kong, so long as its business activities target the Hong Kong public.”
The SFC also states that “some cryptocurrency-related investment products may be regarded as ‘securities’…parties dealing in, advising on, or managing such products in Hong Kong, or targeting such services to investors in Hong Kong, may be subject to the SFC’s licensing, conduct and authorization requirements,” adding that “Parties engaging in the above activities without a relevant licence or authorization from the SFC may be committing a criminal offence.”
What do you make of the recent spate of regulatory warnings pertaining to bitcoin? Share your thoughts in the comments section below!
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