Tuesday

18th Dec 2018

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

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join 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.

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.

EU gives Switzerland another six months for a deal

The EU commission is giving more time to the Swiss government to endorse a deal that would put various sectorial agreements to access the single market under one deal. Nevertheless, after Brexit, the EU has had enough of exceptions.

Greens boycott EU-Morocco vote after lobbying expose

EUobserver has exposed Moroccan lobbying at the European Parliament, prompting a probe to be launched against several MEPs. The Greens have now decided to boycott next week's Morocco trade vote in protest, saying the lobbying investigation must be finished first.

News in Brief

  1. 3,500 UK troops on standby for no-deal Brexit
  2. Brexit: Opposition disagrees over no confidence vote
  3. EU court confirms suspension of Polish judges law
  4. France to tax Google, Apple, Facebook, Amazon
  5. EU negotiators agree CO2 targets for cars
  6. May: Brexit vote will be week of 14 January
  7. Rome finds extra budget funds to fit EU demands
  8. Polish climate talks end in agreement on rulebook

Stakeholders' Highlights

  1. International Partnership For Human RightsKyrgyz authorities have to immediately release human rights defender Azimjon Askarov
  2. Nordic Council of MinistersSeminar on disability and user involvement
  3. Nordic Council of MinistersInternational appetite for Nordic food policies
  4. Nordic Council of MinistersNew Nordic Innovation House in Hong Kong
  5. Nordic Council of MinistersNordic Region has chance to become world leader when it comes to start-ups
  6. Nordic Council of MinistersTheresa May: “We will not be turning our backs on the Nordic region”
  7. International Partnership for Human RightsOpen letter to Emmanuel Macron ahead of Uzbek president's visit
  8. International Partnership for Human RightsRaising key human rights concerns during visit of Turkmenistan's foreign minister
  9. Nordic Council of MinistersState of the Nordic Region presented in Brussels
  10. Nordic Council of MinistersThe vital bioeconomy. New issue of “Sustainable Growth the Nordic Way” out now
  11. Nordic Council of MinistersThe Nordic gender effect goes international
  12. Nordic Council of MinistersPaula Lehtomaki from Finland elected as the Council's first female Secretary General

Latest News

  1. Muscat's one-man rule poses challenge for EU
  2. Orban protests target state media in new front
  3. Brexit and the Queen Sacrifice
  4. EU gives Switzerland another six months for a deal
  5. Fiscal discipline rules in eurozone are devastating
  6. EU capitals see weekend of tear gas and water cannon
  7. Bulgarian 'EU passports' whistleblower wants justice
  8. No more Brexit talks, despite May's pleas

Join EUobserver

Support quality EU news

Join us