Tuesday

18th May 2021

EU watchdogs warn of cryptocurrency price bubble

  • EU regulators say people risk losing their money with cryptocurrencies (Photo: BTC Keychain)

European regulators say people investing in cryptocurrencies, such as Bitcoin, risk losing all their money.

On Monday (12 February), the European Supervisory Authorities (ESAs) watchdog issued a joint statement that the currencies "have shown clear signs of a pricing bubble."

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

It said people are not protected if their virtual currency were to be stolen or subject to a cyber-attack, given the unregulated nature of the digital money. The ESAs include the securities (ESMA), banking (EBA), and insurance and pensions regulators (EIOPA).

EU commission vice-president Valdis Dombrovskis in a tweet said he welcomed the statement, following his December warnings of "clear risks" the currencies posed.

The London-based EBA had also issued a similar warning four years ago, when it said people could lose their money when investing in virtual currencies.

The latest warning comes amid a spike in Bitcoin trading over the past week after having plummeted by some 60 percent from around $20,000 (€16,237) in December to below $8,000 (€6,495) in February.

Pressure to regulate the currency in Europe has also emerged following demands by members of the governing council at the European Central Bank.

The regulators' warning also comes ahead of plans by the European Securities and Markets Authority (ESMA) to scrutinise the virtual currency and its associated blockchain technology.

The issue will likely be discussed at an upcoming G20 meeting of the most advanced economies, following demands by both France and Germany, Reuters reported last week.

The two countries said the currencies "pose substantial risks for investors and can be vulnerable to financial crime." They are also worried it may increase financial instability.

On Monday, Rob Wainwright, the head of EU police agency Europol, told the BBC's Panorama that billions of euros in criminal money is being laundered using the virtual currencies.

The cryptocurrency also appears to be generating an energy shortage crisis in Iceland.

A spokesperson for Icelandic energy firm HS Orka told the BBC that the island nation is facing problems due to the electricity needed to mine Bitcoins.

The data centre mines are run by computers, which are connected to a global network and used to process transactions between cryptocurrency users. In return, the centres generate small Bitcoin rewards.

"What we're seeing now is ... you can almost call it exponential growth, I think, in the [energy] consumption of data centres," he was cited as saying in the BBC.

Magazine

Digital currency, the Airbnb and Uber killer

The digital currency Ethereum allows people to run so-called smart contracts, potentially creating a decentralised sharing economy, and could be the beginning of the end for firms like Uber and Airbnb.

France urges EU virtual currency rules amid Libra risk

France has urged the EU to introduce a framework for the regulation of cryptocurrencies, after the introduction of the new Facebook virtual money 'Libra' threatens the financial stability of the EU.

Germany adopts blockchain strategy and says no to Libra

The German federal government has passed a blockchain strategy designed to unlock the potential of this new technology, in both Germany and Europe, and prevent the risks associated with its implementation.

News in Brief

  1. Schäuble: Germany must protect Jews from antisemitism
  2. French row on far-right EU fraud gets ugly
  3. UK: Indian variant to become dominant strain within days
  4. More than 5,000 migrants breach fortress Spain in Morocco
  5. Scientists question Sputnik V results in The Lancet
  6. UK asks EU for more time on Northern Ireland border
  7. EU Commission appoints first ever anti-racism coordinator
  8. Frontex: Irregular border crossings 'on rise'

Vietnam jails journalist critical of EU trade deal

A journalist who had demanded the EU postpone its trade deal with Vietnam until human rights improved has been sentenced to 15 years in jail. The EU Commission says it first needs to conduct a detailed analysis before responding.

Stakeholders' Highlights

  1. Nordic Council of MinistersNordic Council enters into formal relations with European Parliament
  2. Nordic Council of MinistersWomen more active in violent extremist circles than first assumed
  3. Nordic Council of MinistersDigitalisation can help us pick up the green pace
  4. Nordic Council of MinistersCOVID19 is a wake-up call in the fight against antibiotic resistance
  5. Nordic Council of MinistersThe Nordic Region can and should play a leading role in Europe’s digital development
  6. Nordic Council of MinistersNordic Council to host EU webinars on energy, digitalisation and antibiotic resistance

Latest News

  1. What does EU want for Kosovo visa-free travel?
  2. EU and US reach steel truce in effort to reset relations
  3. EU unveils roadmap to green maritime activities
  4. We Palestinians are looking to the EU to uphold our rights
  5. EU criticises Israeli bombing of Gaza Strip media office
  6. First aid for Polish democracy
  7. 40 years of AIDS is more than enough
  8. EU impunity for Israel creating 'horror' in Gaza

Join EUobserver

Support quality EU news

Join us