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Crypto, EU/Europe, Regulatory

MEPs demand digital European currency to match the spread of private cryptos and aid fight against money laundering, terrorist financing

By Dan Byrne for AMLi

MEPs in Brussels have called for a European digital currency to match the many private equivalents in the market, saying the move would help the fight against terrorist financing and money laundering.

Speaking on the rapid shift towards digital business, especially in the wake of the COVID-19 pandemic, MEP Stefan Berger of Germany stressed that digital assets like crypto currencies currently have a high market capitalisation in the EU, and that there were dangers of financial crime attached.

“The fact that they [digital assets] can be sent cheaply across borders as easy as a text message, this is very tempting,” he said, nodding also to the imminent arrival of Facebook’s own cryptocurrency, Libra.

“As a consumer, I would rather trust a central bank than Zuckerberg,” he told Parliament. “The question is not ‘will there be digital currencies in the future’, but ‘who will issue and control them?’

His comments came immediately after the Parliamentary Committee on Economic and Monetary Affairs presented recommendations to the Commission on emerging risks in digital finance and the challenges involved in regulating the industry.

Committee spokesperson Ondřej Kovařík of Czech Republic emphasised that attention should be given to the crypto assets and how they can be connected to financial crime.

The calls for a public, digital European currency were echoed by MEPs across the camber during Wednesday’s debate – the crux of their arguments coming down to the EU retaining monetary sovereignty in a market where private currencies are gaining prominence.

The threat of these private entities being channels for financial crime was also discussed.  

“$76 billion of illegal activity each year involves bitcoin,” said Eero Heinäluoma of Finland. “Therefore, we can’t leave any regulatory loophole open. There is no place for digital assets not meeting EU standards.”

Lithuania’s Stasys Jakeliūnas dismissed bitcoin as “Ponzi scheme, financial bubble and environmental disaster,” and praised a digital European currency as something which could “boost the euro on a global scene.”

Meanwhile, there were some calls to push back on private cryptocurrencies to the point of outlawing them altogether, as countries such as Egypt, Pakistan, Algeria and Bolivia have already done.

“We have to stand up to the global players who want to make quick money to be used for financing terrorism and money laundering,” said Helmut Geuking of Germany.

“Even now, Europe’s banks are not saying how much they’re working with cryptos. I think it is high time to prohibit private currencies outright,” he told Parliament.

The role of cryptocurrencies in financial crime came under scrutiny following a recent report from Blockchain analytics and cryptocurrency intelligence firm CipherTrace, which said almost two thirds of European entities that handle digital assets don’t follow adequate know-you-customer (KYC) due diligence.

Some MEPs in Parliament stressed that improving this was important and called for more regulations in the crypto sphere, so that the same rules would be applied to crypto assets as they are to more traditional forms of finance.

European Commissioner for an Economy that Works for the People Valdis Dombrovskis advised that the Commission would continue to “bring crypto assets into the regulated sphere for consumer protection, financial stability and anti-money laundering”

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