A recent report published by the European Parliament advises policymakers and regulators not to ignore cryptocurrencies or attempt to ban them. It discusses how crypto should be treated, their taxation, as well as their potential impact on financial systems and central banks’ monopolies on money issuance.
Also read: Yahoo! Japan Confirms Entrance Into the Crypto Space
European Parliament’s In-Depth Analysis
The European Parliament last week published an in-depth analysis entitled “Virtual currencies and central banks monetary policy: challenges ahead.”
The 33-page document was provided by Policy Department A at the request of the Economic and Monetary Affairs Committee. It is co-authored by Marek Dabrowski and Lukasz Janikowski.
The report acknowledges that virtual currencies (VCs) “are often referred to as ‘cryptocurrencies’ because the majority of VCs rely extensively on use of cryptographic algorithms.” However, the authors of the paper wrote, “in our opinion, this term is misleading and may have a pejorative meaning, so we will not use it in our paper.” The document specifically defines VCs as private money that is usually decentralized, exists exclusively in digital form, most are based on blockchain technology, and most have global character meaning they work across national borders.
The report reads:
Policy makers and regulators should not ignore VCs, nor should they attempt to ban them. Both extreme approaches are incorrect.
The authors further asserted, “VCs should be treated by regulators as any other financial instrument, proportionally to their market importance, complexity, and associated risks…Given their global, trans-border character, it is recommended to harmonize such regulations across jurisdictions.” In addition, they recommend that investment in cryptocurrencies be taxed similarly to investment in other financial assets.
Impact on Financial Systems
The report discusses the potential impact of cryptocurrencies on financial systems
