Any attempt to regulate cryptocurrencies such as Bitcoin must be on a global scale as national or regional rules would be hard to enforce on a virtual, borderless community, a director at Germany’s central bank said on Monday.
National authorities across the globe, and particularly in Asia, have attempted to put the brakes on a global boom in the trading of Bitcoin and other cryptocurrencies – a form of digital money created and maintained by its users.
But Joachim Wuermeling, a member of the board of Germany’s Bundesbank, said national rules may struggle to contain a global phenomenon.
“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 told an event in Frankfurt.
Chinese regulators have banned initial coin offerings, shut down local cryptocurrency trading exchanges and limited bitcoin mining – but activity has continued through alternative channels in China despite the crackdown.
South Korea, where speculation on cryptocurrencies is also rife, is working on plans to ban virtual coin exchanges.
European Union states and legislators agreed last month on stricter rules to prevent money laundering and terrorism financing on exchange platforms for bitcoin and other virtual currencies. (Reporting By Francesco Canepa Editing by Jeremy Gaunt)