The European Union (EU) announced news on Monday (Feb. 26) that it’s willing to step in and regulate cryptocurrencies if the risks associated with digital tokens aren’t addressed.
According to a report in Reuters, citing officials from the European Union, the wild price movements of bitcoin last year and into 2018 has resulted in huge losses for some and big gains for others.
“This is a global phenomenon, and it’s important there is an international follow-up at the global level,” European Commission VP Valdis Dombrovskis told reporters. “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.”
Reuters noted earlier in February that both Germany and France said cryptocurrencies offer new opportunities as well as the potential for big risks to investors. The countries also said digital tokens could be vulnerable to manipulation by criminals if safeguards aren’t introduced.
However, because cryptocurrency only represents a tiny part of the financial systems around the globe, there hasn’t been a strong consensus in Europe about how to regulate it. There’s also a real fear that if policymakers clamp down too quickly on cryptocurrencies, it could result in a loss of jobs and growth to other areas where the government is more accepting of digital tokens. Dombrovskis, for his part, believes cryptocurrencies hold a lot of promise.
Meanwhile, Markus Ferber, a center-right European Parliament member, told Reuters he believes the EU needs to respond quickly with regulation instead of waiting for rules to slowly come about regarding cryptocurrencies.
“In order to make sure that retail investors do not fall prey to market manipulation and fraud, virtual currencies should be regulated as other financial instruments,” Ferber said in a statement.