European Parliament Advises Lawmakers to Not Ban or Ignore Cryptocurrencies

European Parliament published a report urging lawmakers to refrain from banning or ignoring cryptocurrencies.

The document was penned by Marek Dabrowski and Lukasz Janikowski, both from Center for Social and Economic Research. The document was provided by Policy Department A at the request of the Economic and Monetary Affairs Committee.

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Defining virtual currencies (VC), the paper said, “The European Banking Authority (EBA) defines a VC as a digital representation of value that is neither issued by a central bank or public authority nor necessarily attached to a fiat (conventional) currency, but is accepted by natural or legal persons as a means of exchange and can be transferred, stored or traded electronically.”

However, the paper added that VCs have no intrinsic value in the sense that they are not linked to any underlying commodity or sovereign currency. In this respect, they do not differ from most contemporary sovereign currencies.

It said that there are economists who believe virtual currencies to be “inventions of quacks and cranks, a new method of monetary utopia or instrument for money laundering are mistaken.”

The report which is a 33-page document also talks about cryptocurrencies like bitcoin, ethereum and Ripple.

Highlighting the advantages and disadvantages, the report states, “Policy makers and regulators should not ignore VCs, nor should they attempt to ban them. Both extreme approaches are incorrect. 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 harmonise such regulations across jurisdictions. Investment in VCs should be taxed similarly to investment in other financial assets.”

Although the report plays the devil’s advocate at times, it conclusively weighs the pros and cons of virtual currencies and says, “It is likely to stay with us for some more time.”

Last month, International Monetary Fund had also published a paper, advocating for regulations on cryptocurrencies.