Presided by Afonso Loureiro and Pedro Ferreira

Head-Organised by Joo Bernardo Gonalves

INTA
Cryptocurrencies popularity has been steadily increasing since their
creation, and their potential to evolve into a mainstream currency is growing.
Despite this, legislation regarding it across Member States is not harmonized, being
non-existent in some cases. How can the EU protect both its consumers and the EU
Single Market, and what should its priorities be regarding Cryptocurrencies
legislation?
What is a cryptocurrency?
Cryptocurrency means electronic-money that is made hidden and private
and therefore secureby means of encryption.
All cryptocurrencies are maintained by a community of cryptocurrencyminers who are members of the general public through the use of their computers,
for anonymous processing of transactions. Most are designed to decrease in
production over time, which creates a market cap on them.
The first, and now most known, cryptocurrency to be created was Bitcoin,
back in 2009. Today there are hundreds of other cryptocurrencies, being the ones
with biggest marke capitalization the LiteCoin, Dash and DogeCoin.

ES Jos Falco

7th to 9th of October

Presided by Afonso Loureiro and Pedro Ferreira

Head-Organised by Joo Bernardo Gonalves

Benefits and Risks for the major shareholders

Individuals
The main stakeholder regarding
crypto-currencies are the individuals who
see a gain in freedom of paying, being able to
make transactions from anywhere in the
world. Have control to trace the transaction
information, while keeping their personal
information completely hidden. Because they
dont depend on banks, any risks of collapse
(end up with nothing) are avoid.
However, by relaying on cryptocurrencies the user is also exposed to some
risks such as fraudulent exchange services
which in the past stole money from their
customers. Hacking can and have been used
to steal Bitcoin from user accounts.

Merchants
It also brings some advantages for sellers: an easier payment anywhere
around the world and protection from fraud due to the fact that Bitcoin
transactions cannot be reversed and do not carry with them personal information.
Although it is still not widely possible to use a credit card to buy Bitcoins
online yet, there being no easy way to buy them or sell them, this is likely to improve
fast in a near future.

ES Jos Falco

7th to 9th of October

Presided by Afonso Loureiro and Pedro Ferreira

Head-Organised by Joo Bernardo Gonalves

Governments
It brings traceability to transactions making offshore accounts easy to
trace and getting rid of anonymous transactions in the form of physical cash. Virtual currencies cannot be counterfeited.

Since cryptocurrency exists outside the financial system it is not easy for
the state to grab them without consent of the owner.
That could impair the effectiveness of courts and also deals a blow government finance through bank bail-ins like in Cyprus. This feature of Bitcoin also attracts crime. People can buy and sell drugs and other illegal items with significantly
less risk of being tracked by authorities. The fact the transactions are anonymous
makes it hard to tax them.

What has been done in the EU?

In 2012 the ECB passed a report on which it acknowledges that Bitcoin is a
mean to overcome the limitation of traditional currencies. However, highlights it
has no intrinsic value like gold and also sees the risk of drug trafficking, money
laundering and tax evasion with Bitcoin. If virtual currencies become more prevalent, legislative action will be needed.
The European Banking Authority (EBA) in August 2014 released a report that
identified some advantages, accompanied by a wide array of disadvantages.
ES Jos Falco

7th to 9th of October

Presided by Afonso Loureiro and Pedro Ferreira

Head-Organised by Joo Bernardo Gonalves

Given all disadvantages the EBA is also promoting regulation of

the virtual currency. A position that is virtually non-existent. Until such
regulation is passed, the EBA recommends to banks in the EU that they shun crypto
currencies and not trade in them.
The ECB later publicized more small papers on the topic but the European
Council (EC), which is in charge of passing directives and regulations, sent no directives or regulations that are applicable to virtual currency. But after the EBA published its report, the EC apparently became aware of the problem and is working on
legislation.
Since it is not good for the EU to stand divided in this matter, what should be
the priorities regarding Cryptocurrencies legislation in the interest of all stakeholders?
ADDITIONAL LINKS
https://www.cryptocoi
nsnews.com/cryptocur
rency/
http://www.investoped
ia.com/terms/c/crypt
ocurrency.asp
https://www.yacuna.c
om/blog/
https://www.cryptocoi
nsnews.com/bitcoinadvances-spaineurope/

ES Jos Falco

7th to 9th of October