The European Banking Authority (EBA) has weighed in on the use of virtual currency, and recommends that Bitcoin be avoided until regulatory systems are put into place.
A document prepared by the EBA for address to the European Commission and European Parliament sets out the regulatory body's opinion (.PDF) on virtual currency — such as Bitcoin, Litecoin and Peercoin — and warns financial institutions to keep their distance until the industry is regulated.
The EBA is responsible for monitoring new and existing financial activities in the European region, with a view to promote the safety of financial markets and issue guidelines and recommendations to keep business flowing. The EBA did not take an interest in virtual currency until September last year, and issued a warning in December outlining the risks of investing in Bitcoin.
The EU financial and banking watchdog says that a "thorough assessment" of virtual currency (VC) needs to be undertaken, and the main question is whether cryptocurrency can, or should, be regulated.
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