A German central bank official said that the only way to effectively regulate bitcoin and other cryptocurrencies is to pursue a global framework with “the greatest possible international cooperation.”
Director of Germany’s Central Bank Calls for Global Cryptocurrency Regulation
Speaking an event in Frankfurt, Deutsche Bundesbank director Joachim Wuermeling said that “effective regulation” is only possible at the international level, according to a Reuters report.
“Effective regulation of virtual currencies would therefore only be achievable through the greatest possible international cooperation, because the regulatory power of nation states is obviously limited,” Wuermeling said.
To date, cryptocurrency regulation has largely been a piecemeal effort at the national level, reflecting the differing stances that governments have taken toward this new technology.
Many nations, such as the US and Japan, have thus far sought regulatory frameworks that protect retail investors without stifling innovation.
Others, though, have adopted hostile stances. China — once the world leader in both cryptocurrency trading and mining — forced the closure of all domestic bitcoin exchanges last September, and the People’s Bank of China (PBoC) is currently working to make the country less hospitable to miners, forcing them to move to other regions.
While naysayers predicted China’s hostile regulatory framework would spell doom for bitcoin, what actually happened served to confirm Wuermeling’s thesis. The void left by the closure of China’s cryptocurrency exchanges was quickly filled by other markets, allowing countries such as South Korea to emerge as a major market in the global crypto-economy.
South Korea’s domestic cryptocurrency trading market has become so heated that the government has recently implemented restrictions in a bid to curb speculative purchases made by retail investors and minors.
However, as in the case of China’s earlier regulations, it is likely that if South Korea’s new rules do make a serious dent in cryptocurrency trading, the decline in volume will lead to a corresponding increase in another nearby market, most likely Japan.
G20 Nations Call for Cryptocurrency Debate
Wuermeling is only the latest financial regulator from a G20 nation to express the need for an international framework for cryptocurrency regulations.
Just last week, US Treasury Secretary Steven Mnuchin made similar comments, stating that while US regulators were equipped to combat the use of cryptocurrency in money laundering schemes, other G20 members are not so well-prepared.
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