An interesting twist concerning digital currencies appeared recently in the heart of the European Union. This organization is one of the key agencies of the biggest political union in the world and carries a lot of weight behind both its decisions and its statements. The latest statement is directly related to the cryptocurrencies and has come directly from a highly-ranked member of the same agency.
In the midst of the current prices slump, the fact that the cryptocurrencies are being discussed in a political setting is important and reassuring. The is especially true because the statement is not cautionary or negative in its basic meaning. In a nutshell, the EU Commission stated that the cryptocurrencies are here to stay and that they are important now, but will be much more important later.
Instead of providing the same general brush strokes of the previous years on crypto, the EU Commission offers something closest to the objective acceptance of the current state of affairs in the block, but also outside of the block and around the world. Here is the breakdown of the same message and what does it represent to the crypto field, followed by an analysis of the crypto market state of affair in Europe.
Valdis Dombrovskis Statement
The European Commission acts as the block executive body that proposes new legislation. This year, it will conclude an assessment of regulation that governments crypto assets. The reasons for this is according to one official, the fact that crypto assets are here to stay. During a press converse that happened after the meeting of the Economic and Financial Affairs Council, the vice president of the EU Commission Vladis Dombrovskis said that the member states are in support for charting regulation.
This would govern the cryptocurrencies and its industry in the same economic region. According to him, the meeting included a solid exchange of views about the cryptocurrency asset. The result of that was an agreement that the same assets are here to stay.
The market might experience turbulence like recently, but it will continue to grow. The significance of this statement is exceedingly relevant, especially in the post late 2017 price spike. Like in 2014 with the collapse of Mt. Gox, there are many voices claiming that the crypto phenomenon is on its way out or that it is mutating to a form where it will be more or less irrelevant to the regular users. The Dombrovskis very much challenges this approach to the field and for the crypto community, there could be no better news coming from the European Commission at this point.
The Chance for ICOs
However, the Dombrovskis statement covered additional important factors in this field. The EU Commission vice president said that the initial coin offerings have the potential to end up being a viable form of obtaining funding from alternative sources. To illustrate his point, he said that only in 2017, over $6 billion in funding was raised using ICOs, in spite of things like the Chinese crackdown on these ventures. This year, the sum will be even higher, even though the Chinese ban still stands.
Now, the challenge of the EU is to find out how it can harness the most of its potential without jeopardizing the citizen funds that enter the field. Here, the major hurdle is the process of classifying and categorizing the crypto assets. Once the classification has been made, the EU could implement the existing rules that govern financial markets and use them to regulate cryptocurrencies.
With this in mind, the EU Commission is working with the European Supervisory Authorities so that the mapping of the crypto assets come to get some kind of a legal framework. On this ground, the subsequent building of the future steps could take place.
ICO-Friendly EU Officials
Previously, Dombrovskis has made positive comments about ICOs and their ability to act as innovative ways of raising funds. This happened at the beginning of 2018 when he stated that the governance over ICOs could end up working on a case-by-case approach. At the same time, he also conceded that a lot more work is ahead of the EU Commission on this matter. As of now, the promised work seems to be continuing.
There are other ICO-friendly officials at the center of the European Union. A member of the EU Parliament suggested that a new ICO rule could be set up for their governance. According to the suggestion, it could provide an upper cap on the proceeds from token sales. In return, the same ICO project would be made eligible actors the European Union member states.
A Complex Body
Similar to many other issues, the EU is a complex tapestry of influences and regulatory bodies. For example, Malta is already deep in the cryptocurrency waters. However, with the status of its Premier, this could be a political problem for the rest of the block. Similar to this, the EU Commission is simply stating the obvious – clearly, the cryptocurrencies are here to stay and they are staying well in the block nations.
Bitcoin is widely used in the EU and its nationals from a range of countries are active in business ventures related to cryptocurrencies. For example, there are many mining companies that are native to the EU, as well as those which are arriving in northern nations to build their crypto mining facilities there.
In many ways, there is nothing that the EU could do about these ventures – the decision would be up to individual governments and at least for now, there is not that much pressure from the public to do anything, either positive or negative for this field.
Again, like in so many previous examples, cryptocurrencies are similar to eSports, digital-first media and other global ventures that came apparently from out of nowhere and spread across the globe. The position of the EU Commission seems to be sensibly moving to a mindset that accepts the current situation and recognizes the need to eventually regulate it. But, instead of cracking down, it chooses to deliberate about the best approach and not stifle the development of the existing ventures in the meantime.