Major governments will have to come to terms with digital currencies, according to a report to the European Parliament. Although virtual currencies are not likely to replace traditional money anytime soon, the briefing paper argues that they are also not a mere bubble or fad; crypto is here to stay, and should be regulated on the same terms as other financial instruments.
The 33-page report was published by the Policy Department for Economic, Scientific and Quality of Life Policies, at the request of the European Parliament’s Committee on Economic and Monetary Affairs.
It contains an unusually fair-minded assessment of cryptocurrencies and their future prospects.
Although government bodies have historically tended to roll their eyes at “private money” the EP report indicates that regulators should take virtual currency seriously. “[W]e try to take a middle ground between the optimism and excitement of the techno-enthusiasts and advocates of private money and the scepticism or even hostility of those who see [Virtual Currencies] as product of monetary mania,” the authors state. “[W]hether one likes them or not, VCs will remain a permanent element of global financial and monetary architecture for years to come.”
The report is not exactly bullish on cryptocurrencies, and does not expect them to replace the Euro anytime soon. However, it’s still far more progressive than the language from US regulatory bodies, not to mention the “baby brains” contingent:
“The economists who attempt to dismiss the justifications for and importance of VCs, considering them as the inventions of “quacks and cranks”, a new incarnation of monetary utopia or mania, fraud, or simply as a convenient instrument for money laundering, are mistaken.”
Also included are the de rigeur cautions about money laundering, tax-evading and other illegal activities, as well as the dangers posed by volatility and hacking.
However, the authors don’t get everything right. Members of of the European Parliament may soon read about “the bankruptcy of the Tokyo-based company Mt. Cox,” as well as the usual half-truths about the environmental consequences of mining, with little reference to minerless currencies.
Nonetheless, it’s an optimistic sign that the EU’s leading body is putting thought into digital assets, and that its economic Policy Department is encouraging regulators to treat them seriously—and fairly.
The author holds investments in cryptocurrencies and tokens.