European Parliament Draft Report Calls for the Creation of Task Force Devoted to Digital Currencies

Digital Currency

A new report published by the European Parliament’s Committee on Economic and Monetary Affairs calls for the establishment of a task force, with its own budget and dedicated staff, that would study digital currencies and provide policy advice to the European Union and member-states. The report also provides for more strict regulation of both exchanges and wallet service providers – something the European Commission is already considering. At the same time, according to CoinDesk, the European Council is also weighing digital currency regulation.

Prior to the publication of the report, the European Parliament held a hearing in late January of this year, during which it discussed bitcoin and blockchain technology within the context of terrorist financing and money laundering. Consistent with sentiments expressed during the January hearing, the report calls for necessary regulation of digital currencies, but proposes a balanced approach: “[The European Parliament] calls for a proportionate regulatory approach so as not to stifle innovation at an early stage, while taking seriously the regulatory challenges that the widespread use of [virtual currencies] and [distributed ledger technology] might pose.” Report at 7. Specifically, the report emphasized the need for additional regulation by advocating for

[T]he creation of a horizontal Task Force DLT (TF DLT) under the leadership of the [European] Commission, in order to provide the necessary technical and regulatory expertise to support the relevant public actors, at both [European Union] EU and Member State level, in their efforts to ensure a timely and well-informed response to the new opportunities and challenges arising with the introduction of DLT applications; observes that the potential of DLT use and the present investment dynamics justify TF DLT being equipped with a proper budget and being staffed with regulators and external technical experts dedicated cross-sectorally to the monitoring of DLT-based applications, identifying standards for best practice, and, where appropriate, recommending regulatory measures and addressing potentially arising consumer protection issues and systemic challenges[.]

Id. at 7. The report also “[s]tresses that [virtual currencies] and [distributed ledger technology] have the potential to contribute positively to consumer welfare and economic development by,” for example, “reducing the cost of access to finance even without a traditional bank account, thereby potentially contributing to financial inclusion,” and “enhancing the speed and resilience of payment systems thanks to the inherently decentralised architecture of [distributed ledger technology].” Id. at 5.

The Committee on Economic and Monetary Affairs is expected to vote on the report’s contents in April, and if approved, could move to the full Parliament for a vote as early as May. The adopted report will then be sent to the European Commission for consideration.

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