There are no guarantees for people who invest in bitcoin. The ECB considers the creation of the digital euro a “positive” alternative.
The European Commission and the European Securities and Markets Authority (ESMA) presented a report showing bitcoin and cryptocurrencies as risk assets.
In the document called the 2021 Trends, Threats and Vulnerabilities Report, published on March 17, the European authorities indicate that “some crypto assets are hazardous and speculative.”
The new warning from the European Union (EU) comes when cryptocurrencies gain more and more space in the market, significantly increasing institutional investment.
In this sense, the European Supervisory Authorities (AES) call on people to be attentive “to the high risks of buying and holding these financial instruments, since there is the possibility that they will lose all their money.”
According to the publication, most cryptocurrencies are not under any EU regulation, which prevents consumers of crypto assets from having an endorsement or guarantee that regulated financial services do.
It is important to remember that, in 2020, the European Commission presented a proposal for the regulation of the crypto-asset market, known as MiCA (Markets in Crypto-Assets), to create a safe environment that benefits consumers and investors.
In this sense, this year’s Report assures that the MiCA proposal “remains subject to the result of the process. Therefore, consumers do not currently benefit from any of the guarantees provided in that proposal because it is not yet legislation of the EU”.
Recently, the European Central Bank (ECB) intends to veto power over cryptocurrency launches in the eurozone and wants a greater supervision spectrum.
A Positive point of view on Central Bank Digital Currencies
The document presented by the European Commission also exposes the growth in the acceptance of a digital currency issued by the ECB. “Central bank sentiment towards digital currencies is changing positively,” they note.
In the Report, they quote the ECB president, Christine Lagarde, who indicated that “they should be prepared to issue a digital euro when the need arises.”
They say that, in October last year, the European bank debated creating a digital euro. However, the need to thoroughly examine the associated risks and operational challenges remains very prominent. The legality of Bitcoin usually falls into a gray area due to its novelty and globality. However, there are regulations specific to the network and rules created by the States.
It is Essential that the Authorities of the World Recognize Cryptocurrency in Those Laws in which they are Relevant
In this sense, this medium indicates that a cryptocurrency is “a computer program that, through the use of a certain language, establishes rules for the internal discourse of the program.” It is essential to consider that it is almost “a Magna Carta that prescribes the universe of the application. Hence, among software developers and engineers, there is so much insistence on affirming that ‘the code is law'”.
Besides, there are suggestions about promoting the massive adoption of bitcoin. It is necessary to open spaces for “regulations on electronic transactions, capital raising, and issuance of securities (in the case of ICOs), payment of taxes, anti-fraud and money laundering laws of capitals, among many other areas”.
By: Jenson Nuñez
