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Bitcoin Businesses EU Government

We Will Regulate Bitcoin if Risks Are Not Tackled, EU Finance Head Says (theguardian.com) 143

Posted by msmash from the tough-matters dept.
The European Union has warned that it will regulate cryptocurrencies if the risks exposed by the meteoric rise of bitcoin and its ilk are not addressed. The Guardian: The boom and bust of cryptocurrencies has seen some investors make millions where others have suffered heavy losses. Bitcoin, which now trades around $9,000 a token but recently dropped to less than $6,000, leads the pack rising nearly 2,000% to just under $20,000 in 2017, fuelling a global investment craze. "This is a global phenomenon and it's important there is an international follow-up at the global level," Valdis Dombrovskis, the EU's financial chief, said on Monday. "We do not exclude the possibility to move ahead (by regulating cryptocurrencies) at the EU level if we see, for example, risks emerging but no clear international response emerging."
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We Will Regulate Bitcoin if Risks Are Not Tackled, EU Finance Head Says More

We Will Regulate Bitcoin if Risks Are Not Tackled, EU Finance Head Says

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  • Great idea (Score:5, Funny)

    by Vengeance ( 46019 ) on Monday February 26, 2018 @12:45PM (#56188405)

    Cryptocurrencies are fundamentally different from other investments, in that they are the only kind where unexpected market twists and turns lead to winners and losers.

    • Re: (Score:1)

      by Anonymous Coward

      The difference is not of kind, but of magnitude and frequency.

    • Look if frequent thefts of uninsured capital occur in a market, the attractiveness of that market is going to diminish.

      The downfall of BTC is going to be that many people aren't sure if they can trust their wallets or the exchanges. These problems have little to do with the technology and trumps any advantages that cryptocurrency might offer an investor or consumer.

      • also high fees and long transaction times

        • Fees and transaction times balance each other out.

          Want to pay a lower fee? Wait longer for your transaction.
          Want a faster transaction? Pay a higher fee.

          Fees are what will keep Bitcoin running after the 21 million BTC are all mined up. Bitcoin is intentionally designed with an automatically-adjusting difficulty that results in a targeted average delay between blocks. This delay is imperative for the operation of the network. You want all nodes to sync the latest block before a new one comes in. Waiting

      • Look if frequent thefts of uninsured capital occur in a market, the attractiveness of that market is going to diminish.

        Not until a lot of people endure a lot of unnecessary losses. Markets don't solve every problem and they especially don't solve unchecked greed. We have financial regulations for good reasons. Many of those reasons are to prevent people from being defrauded. It's cheaper to society to prevent a crime than to wait for a market to adapt which might take years if it happens at all.

        The downfall of BTC is going to be that many people aren't sure if they can trust their wallets or the exchanges.

        That's not the only problem with it though it is a big one. What's really going to kill it however is the high risk adjusted t

    • The problem is the volatility, and lack of control.
      Investment as opposed to Gambling. When you Invest the Odds are tilted in your favor, and the money you put into the investment for the most part are used towards increasing your odds that it will succeed. While such an investment can be volatile and risky, however your money in such a venture will generally lower its risk.

      The problem right now with Cryptocurrencies, is that putting money into it doesn't help its chances of being more successful. It isn't

      • and lack of control

        I can't possibly imagine why that would bother the Eurocrats...

        • Yep, because what we really want is a world where things like the great depression happen all the time. Starving people, etc. Good times.

        • The Tortoise and the Hare [wikipedia.org] explains why going fastest or full effort will not always allow you to win the race, Especially as the risk of crashing.
          If a commodity price is too volatile and its price goes very high too fast, it is prepped for a big correction where people are due to loose a Lot of Money. Governments which are responsible, and are tying to protect its interests and the interests of its citizens, will try to slow down such economies, So they don't get a glut of people investing into this rapid

      • Re: (Score:2)

        by mccrew ( 62494 )
        Cryptocurrency is not an investment, nor was it ever meant to be.

        • If people buy cryptocurrency in the hope that it will be worth more in the future, that's investment. It may not be successful, and it may not be wise, but lots of intangibles are investments.

    • It's truly awesome that the Euros are going to mitigate the risks of investing! "Benevolent government" at its finest; wish we had that here...
    • Your sarcasm implies that regulation is unnecessary because other investments are not regulated. Except they are. So you have no point. Decent strawman though.
    • Comment removed based on user account deletion
    • Cryptocurrencies are fundamentally different from other investments because there's nothing of intrinsic value behind them. A bond has the government or company behind it. Commodities have the commodity itself.

      I know the counter argument that a bond is only valuable because of it's fiat currency. But that fiat currency has an entire nation of workers behind it. Yes, a nation can collapse (as Zimbabwe did and Venezuela look to be doing) but barring a war with a much more powerful nation that's a slow pro

      • Bitcoin has the Bitcoin Network behind it. Without it, "one bitcoin" is just an entry in a database. With it, you can transfer value around the world at relatively low cost and relatively high speed. This is a useful service, and it is backed by real hardware and software. The same logic applies to other cryptocurrencies. To the extent they are *useful* they have value, just like FedEx and electric utilities are useful services.

  • The European Union has warned that it will regulate cryptocurrencies if the risks exposed by the meteoric rise of bitcoin and its ilk are not addressed

    Oh, the benevolent and omniscient regulators, who know all about the matter (and would've made lots of money had they bothered with such base things), will condescend to keeping their subjects from injuring themselves.

    For the subjects' own good, of course...

    • EU parasites (Score:1)

      by Anonymous Coward

      They're trying to get as much regulating in as possible before their evil organization unravels.

      Three cheers for Brexit!

    • Regulations ARE needed (Score:4, Insightful)

      by sjbe ( 173966 ) on Monday February 26, 2018 @01:21PM (#56188719)

      will condescend to keeping their subjects from injuring themselves.

      Actually yes you can turn off the sarcasm machine. We DO need regulation surrounding cryptocurrencies to protect people. We do have laws and police and regulations for very good reasons. Many of those reasons are to protect those who aren't able to protect themselves both from financial predators and sometimes from themselves. Why? Because A) it's the right thing to do morally and B) nobody exists in a financial vacuum so one person's bad decisions tends to affect others. Are you seriously arguing that we should have no regulations of financial systems? Or are you one of the more foolish varieties of libertarian who suffers from the delusion that unfettered capitalism with no rules is somehow a good thing?

      • Re: Regulations ARE needed (Score:4, Insightful)

        by Type44Q ( 1233630 ) on Monday February 26, 2018 @01:39PM (#56188903)

        We DO need regulation surrounding cryptocurrencies to protect people.

        Or perhaps stupidity should still be painful.

        • Great, then guy who lost it all can shoot you instead of me when he is starving in the street. You said it should be painful.

      • Good Reasons (Score:1)

        by Anonymous Coward

        Yes, we shouldn't let people have any freedom of any sort, as they might make the wrong decision.
        I for one embrace our benevolent dictators, as they have only my best interests at heart.

        To quote CS Lewis
        "Of all tyrannies, a tyranny sincerely exercised for the good
        of its victim may be the most oppressive. It may be better to live
        under robber barons than under omnipotent moral busybodies.
        The robber baron’s cruelty may sometimes sleep, his cupidity may
        at some point be satiated, but those who torment us f

      • Comment removed based on user account deletion

      • Re: (Score:2)

        by mi ( 197448 )

        Are you seriously arguing that we should have no regulations of financial systems?

        Yes, I do.

        Or are you one of the more foolish varieties of libertarian who suffers from the delusion

        Ah, personal insults. How convincing.

        that unfettered capitalism with no rules is somehow a good thing?

        "With no rules" is a strawman of your own creation. You can practice knocking it down in your own backyard.

    • Re: (Score:1)

      by DogDude ( 805747 )
      That's right. That's part of the function of government, as we, as modern societies, have agreed on.

      • we, as modern societies, have agreed on.

        Speak for yourself, schmuck.

        • Re: (Score:2)

          by DogDude ( 805747 )
          I don't need to speak for myself. I'm speaking for the modern society that I'm a part of. If you don't like it, you should move to a different society. There are all sorts on the planet. You could even live in the middle of the ocean, where there's no government and no society. Out there you do all sorts of stupid shit with your money with nobody telling you that it's a bad idea.

        • we, as modern societies, have agreed on.

          Speak for yourself, schmuck.

          If you don't like it, move somewhere else. That's the correct free-market capitalist response, right?

          • If you don't like it, move somewhere else. That's the correct free-market capitalist response, right?

            That depends entirely on who the aggressor is. A reply of "if you don't like it, leave" when one objects to others violating one's property rights has nothing to do with the free market; that would be the authoritarian/socialist response. In a free market one has no obligation to walk away and permit others to violate one's property rights. It is the correct free-market response when you are offended by others doing something with their own property, without violating your rights. The principle is simple: Y

            • You are assuming that regulation violates your property rights. In fact, you can't use your properly freely, since you're not allowed to kill someone with it directly. At that point, it's a question of how much regulation. Property rights mean that stuff can't be taken away from you without consent or due process, not that you have the right to do everything.

  • ... *quite* understand how a distributed cryptocurrency system works. The whole point of it is that it CAN'T be centrally regulated. Beaurocrats and politicians should really attempt to educate themselves about a subject before pontificating about it.

    • Why? If they don't, the whole regulation is about as efficient as the rest of the EU and business can continue as usual.

      The very LAST thing anyone not interested in actually regulating Cryptocurrency could want is them having a clue about it.

    • Re: (Score:1)

      by Anonymous Coward

      And yet the old ignorant dinosaurs of government can still throw your young pimply ass in jail for refusing to pay your taxes which you owe on cryptocurrency gains.

      Grow up, kid.

    • There are many kinds of regulation. It could be as simple as forcing sellers to educate buyers on the risks associated with Bitcoin; controls on advertising; placing limits on "transaction fees", etc. None of that has anything to do with how cryptocurrency works, just how it's sold.

      • Re: (Score:2)

        by xvan ( 2935999 )
        The transaction fee, at least on bitcoins, is intrinsic to the system. If you want a say on it, you need 50% of the mining pool. Not that a government couldn't possibly reach that mining power, but at that point they would be, effectively, endorsing the currencies.

    • Re: (Score:1)

      by Anonymous Coward

      They can quite easily regulate businesses that wish to trade in bitcoin, including setting rules for what does (or does not) constitute legal trade using bitcoin. Since the blockchain is a public record, it would be hard for legitimate businesses to avoid government scrutiny.

    • You're right that it can't but what they can do is ban all EU banks, credit card companies and financial institutions from processing payments for cryptocurrency purchasing. There are already banks in the UK that won't allow you to use their credit and debit cards to purchase anything from crypto currency exchanges such as Coinbase.

      • That is happening in the US. I know of at least one bank who was mentioned on Reddit for kicking people out if they are doing any buying/selling to cryptocurrency exchanges, where someone who did a transaction with Coinbase was told to go elsewhere and that all their accounts would be closed due to that.

        If you block the endpoints, where cryptocurrency can't be cashed in and used for buying stuff, then there are no real reasons for people to invest in it.

    • Re: (Score:1)

      by Anonymous Coward

      ... *quite* understand how a distributed cryptocurrency system works. The whole point of it is that it CAN'T be centrally regulated. Beaurocrats and politicians should really attempt to educate themselves about a subject before pontificating about it.

      And I don't think people who say stupid things like "yarg, teh cryptocurrencies are beyond teh regulations" understand that governments don't give a fuck, have laws in places for financial systems, and if it is a financial system which refuses to be regulated,

      • Re: (Score:2)

        by Viol8 ( 599362 )

        "You don't get to decree yourself outside of the authority of a government, it simply doesn't work that way."

        I was just stating a fact. Feel free to enlighten us on how anonymous transactions across secured p2p links can be traced by a government tax office - remember, this isn't GCHQ or the CIA we're talking about here who might be able to do that, but Joe Smith working in a local tax office.

        • Tracing has been done, but, really, the authorities aren't really interested in the movement of Bitcoin. They're interested in the value when you buy something with it or cash it in.

    • Maybe it can't be managed, but it sure can be regulated, such as taxed.
      It might be hard to catch those who profit from bitcoin but do not report their gain, but it doesn't mean regulating it won't have any effect.

  • The European Union has warned that it will regulate cryptocurrencies if the risks exposed by the meteoric rise of bitcoin and its ilk are not addressed.

    Translation: We will regulated cryptocurrencies since there is no one else in a position to address the risks involved even if they wanted to.

    Seriously folks, cryptocurrencies are a criminal's wet dream. Anyone expecting governments to sit on the sidelines and do nothing to regulate them is delusional.

    • It really doesn't matter what those governments do because criminals will merely find another get rich quick scheme to use in order to separate fools from their money. Defenses from the government only come after the thieves are out of the barn. That we see crytpocurrencies being used as such a vehicle is a matter of coincidence and not such much as something inherent to them. They are only useful in scams because they have shown extraordinary growth that gets everyone salivating at the thought of how much
      • Okay, I'll bite, how do you get a cryptocurrency without an ICO? How are ICO's different from issuing private banknotes [wikipedia.org] and why should they not be regulated similarly to prevent fraud and malfeasance? Cryptocurrency hacks seem to think they invented something totally new, but from a monetary point of view it's mostly just a digital version of a promissory note, which for general exchange purposes was abandoned long ago in favor of fiat currencies for good reasons.

      • Re: (Score:2)

        by sjbe ( 173966 )

        It really doesn't matter what those governments do because criminals will merely find another get rich quick scheme to use in order to separate fools from their money.

        It very much does matter what governments do. The fact that dealing with criminals is an eternal game of whack-a-mole is irrelevant. Yes they will try something else but that does not excuse doing nothing about their scams when we know about them. Should we allow check kiting or pyramid schemes just because "criminals will merely find another get rich quick scheme"? Spare me.

        I think that most of this is pointless saber rattling as no one in government has any better understanding of cryptocurrency than your average person on the street, but I expect we'll see plenty of comments from representatives with a "series of tubes" level of understanding.

        They don't have to understand them better though. They just have to understand how they are used to defraud people and take actio

  • Serious question; how do they plan on regulating it?

    • Re:How? (Score:4, Insightful)

      by xxxJonBoyxxx ( 565205 ) on Monday February 26, 2018 @01:37PM (#56188867)
      Usual way:
      1) Politician/regulator will suggest something outlandish that will clearly cripple the industry
      2) Well-heeled members of he industry direct cash payments to politician/regulator and/or their families/interests
      3) Politician/regulator comes back with a different proposal that locks in dominance of top 2-3 players in industry and squashes everyone else
      4) Top 2-3 industry players and politicians/regulators PROFIT; everyone else heads over to Slashdot and Reddit to complain

    • Subjecting exchanges to audit, investigation and subpoena by law. Actually working well with more traditional means of laundering money and evading taxes, regulating the same thing really.

  • We coincidentally happen to agree to the use of legal tender for purposes of exchange because we generally agree its value to ourselves. How can you regulate other mechanisms that have any perceived value without also trying to regulate something as basic as haggling or barter, however? For any private transaction, two parties can agree to whatever exchange is amenable to both of them.

    How the fucking hell do they expect to regulate bitcoin if they can't also simultaneously regulate what people are and

    • Re: (Score:2, Insightful)

      by Anonymous Coward

      How the fucking hell do they expect to regulate bitcoin if they can't also simultaneously regulate what people are and are not allowed to accept in exchange for goods or services?

      By making it illegal to transfer the legal tender to or from a cryptocurrency ... essentially decree any such transaction is effectively money laundering or a drug deal. Cut out the entire banking system as a venue for exchange. Take a large amount of cash and go someplace where you can buy Bitcoin? Same as if you bought drugs.

      W

      • From a legal point of view, yes you are right, any government can regulate anything if they want to. If there is not a law in place already, they'll happily pass a new one to make the regulation legal.

        However, from a moral point of view, the drugs and CP analogy is absurd, and you know it. So the question is rather, will regulation of crypto-currencies be seen as generally legitimized by protecting people from themselves. Or have we soon reached a tipping-point where further government interference is seen

  • Most crypto currencies are developed by anonymous volunteers. They aren't going to fill out any regulatory paper work. If Monero doesn't bother obeying a regulation what are the regulators going to do?

    Oh, you don't mean the currencies, you mean the exchanges. Well many currencies now allow swaps between currencies, so exchanges aren't always needed.

    Oh, but we will regulate when the money moves between fiat and crypto. Yeah, because the regulators have had so much success regulation money going to of

    • The cracking down on *illegal* use of tax havens and laundering through foreign bank accounts has been very successful, billions of dollars recouped
         

  • In order to make sure that retail investors do not fall prey to market manipulation and fraud

    Between the manipulation, fraud and the government's incessant need to continually probe my financial orifices, I'll take the fraud. Thanks anyway.

    Why not just let the market decide? Yeah, Bitcoin is risky. But you bastards are snoopy.

    • they're not worried about you, they are worried about institutions big enough to affect economy and power structure.

      • Re: (Score:2)

        by PPH ( 736903 )

        they are worried about institutions big enough

        The beauty of Bitcoin (and one of it's design goals) is that it doesn't depend on institutions. Big or otherwise.

        That might be who they are actually trying to protect (like buggy-whip manufacturers). But they said "retail investors". No thanks. Don't use me as an excuse. I'm fine on my own.

        • talking about financial institutions not buggy whip makers

          yes it does depends on institutions. Telecom infrastructure which is under government regulation already in a number of ways. the government has a right to kick in your door if you use bitcoin for illegal activity.

  • The same body that sees the problem with 500-Euro notes doesn't see any other problem with cryptocurrencies?

  • It shows just how out of touch the EU Finance heads are these days. Adding financial speculation to the cryptocurrency market was designed to destabilize the market, not stabilize it. Nobody makes money trading if the commodity is stable in price. Its only through the up's and downs that money is made or lost, and the investors like it that way.

    If the price were stable and flat for long periods of time then they would only buy it if it paid back dividends. But cryptocurrencies are not stocks, and they don'

  • Now, I can't say I'm an expert in European affairs. I'm not even an expert in finance. However, if people actually expect zero risk investments, I suspect that they will be disappointed. Of course, precious metals might be a good investment choice. But I imagine that those are already overly regulated too. What a world!

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