The cryptocurrency market is already fraught with volatility, especially in East Asian markets after the South Korean fiasco and Chinese clamping down on bitcoin mining. But there is a new source for further calamity. Anybody’s guess? The Empire is back. The European super-state is at it again. In recent weeks, the only news of European Union was the way it was harassing Theresa May over Brexit negotiations. But what concern it is off to the punk-crypto enthusiasts? But EU being EU couldn’t disagree more. As a result, the Bureaucratic Empire strikes back.
It all began with the French Finance Minister Bruno Le Maire declaration that he wants to “avoid the risks of speculation of possible financial traffics linked to bitcoin”. These developments prompted Central Bank’s Deputy Governor Jean-Pierre Landau to lead an investigative mission to see how cryptocurrencies work and how they might be regulated. A European Commission spokesperson said that they are watching these developments closely. Mario Draghi, ECB (European Central Bank) President responded, “Our main worry with these innovations… is the potential fragility with respect to cyber risks”.
The continental mood thus is shifting to regulate cryptocurrencies and contain the crypto rush as soon as possible. German Finance Minister Peter Altmaier joined his French counterpart in Paris this week to announce that they will present the Franco-German joint proposal at G-20 summit in March. If G-20 moves with them, expect the bitcoin rush to be tamed as G-20 itself contains the majority of the world economy.
But Franco-German proposal must be backed by a unified European stand but the European politics can sour the mood of the Brussels’s bureaucrats. Luxembourg is on board as Finance Minister Pierre Gramegna announced this week that cryptocurrencies must be regulated given the abuse potential of money-laundering and terrorism sponsorship. European Commission which is the most powerful body in the Union is headed by Mr. Juncker who is from Luxembourg so Mr. Gramegna surely has his ears.
Valdis Dombrovskis, Commission’s VP for financial services already has written to three financial watchdogs to observe if there is a bubble forming in the market regarding bitcoin. So, European Commission, European Central Bank, Franco-German political class along with its minions in West Europe at the very least are up in arms against regulating cryptocurrencies at all cost.
But not all is hunky dory in Europe. The German government is in limbo given the reluctance of Social Democrats grassroots to go for another coalition with Ms. Merkel’s CDU. This is problematic for Brussels as without a firm German guidance they can’t plunge into any major decision regarding crypto rush however much they want to. Eastern Europe is very enthusiastic regarding the cryptocurrencies and will react against the excessive regulatory impulse of Commission. Brexit talks are already in divisive phase and a migrant crisis is still looming large. So a swift continental response is very much in doubt. However, if the Franco-German proposal is backed by G-20 and the German government is formed with Merkel being back, cryptocurrencies will plunge like Dante’s Inferno.
The coming weeks may shed some lights on the labyrinthine bureaucratic machinery that is EU whose only defining characteristics are given by Matthew 6:3 in Bible where it is so noble that its left-hand doesn’t know what its right hand is doing. Let’s hope this isn’t the case with its crypto policies.
Stay tuned for further details on this front.
Shubham Dwivedi