Cryptocurrencies represent a new form of decentralized financial and technical system that were created to resolve numerous issues that are present in the traditional banking system. They are becoming more and more widespread among the globe, as they provide a new, fast and independent system from existing financial systems. The first cryptocurrency created was Bitcoin, and it was purely meant to offer a decentralized and cheap form of a new accounting scheme. Later on, other types of cryptocurrencies emerged (such as Ethereum) with the aim to provide a large, scalable system that is safer and cheaper than any other system before.
Nowadays cryptocurrencies are used for a wide range of things, such as sending payments, investing, recording information and logging transactions. Even though the system was made in a well-intentioned way, its core characteristic, anonymity, poses a great threat in a way of money laundering, terrorist financing and tax avoidance. By recognising these threats, the European Union intends to regulate the market of cryptocurrencies. Economic and Monetary Affairs Committee adopted a position on the case, by outlining three main goals to be achieved by the possible regulation.
Firstly, there shall be a uniform legal framework on the level of the Union for all of the existing cryptocurrencies. Secondly, the new rules shall safeguard consumers against market manipulation and financial crime. Thirdly, the creation (mining) of the cryptocurrencies shall be taxed, as they have a large carbon footprint due to the massive consumption of the electricity.
Another important aspect is that cryptocurrencies are not supervised by any authority to date. Thus, the EU intends to involve ESMA (European Securities and Market Authority) and EBA (European Banking Authority) as a supervisory body.
The feedback on the above is quite mixed. Supporters of the EU’s position on this case say that cryptocurrencies are involved in way too much crimes, as the payments are untraceable and anonymous and crpyto mining farms are forming a growing percentage of the world’s carbon emission. Opposers state however, that placing a supervisory authority on top of the existing system will undermine the systems essence, decentralization. They also outline that realistically there is no way of linking the existing crypto accounts to persons or companies.