On Friday, September 7, Brussels-based think tank Bruegel presented its findings to a meeting of 28 European Union (EU) member state representatives in Vienna, Austria. The report by Bruegel's senior staff recommended increased scrutiny of cryptocurrency trading. It also recommended EU policymakers try to improve their understanding of the economic potential of blockchain technology.
Bruegel further suggested it would be sensible to limit "the exposure of financial institutions" to cryptocurrencies and indicated that individual country-based solutions within the EU could be an option before a move to an EU-wide policy.
According to the latest reports, following the meeting in Vienna finance ministers have agreed not to rush to regulate the market. Irish finance minister Paschal Donohoe told the press "the EU will be acting carefully in this area." German finance minister Olaf Scholz explained the Vienna meeting aimed to ensure policy makers understand the challenges faced by the new cryptocurrency space and that they were in a position "in which they're able to act."
A full analysis is to be conducted by European authorities before any regulatory decisions are made.
Currently, individual regulatory actions by European member states vary, with Malta at the forefront of creating regulatory frameworks for cryptocurrencies and ICOs. Switzerland eased some of its regulatory requirements for FinTech startups in 2016 to encourage new technological innovation in the country; the Swiss canton Zug became known as "Crypto Valley" during the advent of blockchain and cryptocurrency technologies. The German federal government recently ruled that cryptocurrencies pose no threat to the financial stability of the country. Though Germany applies existing financial frameworks to cryptocurrencies, due to "global tradability," it believes a coordinated regulatory effort between countries could be more effective.
As for the continent's bankers, the European Banking Authority has taken the position that cryptocurrencies should be clearly distinguished from fiat currencies and not, in fact, described as currencies at all. The European Central Bank also does not consider cryptocurrencies to be a form of money.
As to blockchain technology, the EU's Blockchain Observatory and Forum produced a report in July outlining Europe's "vibrant" blockchain scene, its competitive advantages in the space, and how it could benefit from its historic ability to collaborate across borders. The report also suggested that certain regulations should be clarified to accommodate blockchain technology and cryptocurrencies.