EBA calls for clarity on virtual currency regulation

EBA says regulatory status of bitcoin platforms needs to be clearer.

By Conner Guidry

The European Banking Authority (EBA), has called for more precise definition of the regulatory status of virtual exchange platforms.

The EBA believes that measures that clarify the regulatory status of virtual exchange platforms and custodian wallet providers, such as bitcoin trading platforms and bitcoin wallets respectively, should be implemented in order to avoid risks of misrepresentation.

The statement comes days after  Hong Kong based bitcoin exchange ‘BITFINEX’ lost up to (£49m) in a cyber-attack, which is now likely to see Bitfinex customers foot the bill.

Bitfinex stated in a press release this week saying: “We have decided to generalise losses across all accounts. Upon logging into the platform, customers will see that they have experienced a generalised loss percentage of 36.067%”

The EBA statement, which was a response to a consultation on the scope of the EU’s 4th Anti-Money Laundering Directive, said that bringing virtual currency exchange platforms and custodian wallet providers under the Directive will mitigate the risks of money laundering and terrorist financing that would specifically arise from the use of virtual currencies.

In addition, the EBA claimed that clarifying the regulatory status of virtual exchange platforms could  help avoid the risks of misrepresentation which potentially could be a serious issue in the virtual currency market.

The EBA emphasised how more detail should be provided to specify how competent authorities should carry out tests for the platforms, including the scope of the licensing or registration regime proposed.

The EBA also added that clarifications to these amendments are required, and competent authorities across the EU should be equipped with the appropriate tools to effectively supervise the proposed regulation.