The European Parliament is made up of 751 democratically elected representatives from the 28 member states of the European Union (EU). It’s the legislative body of Europe and resembles the United States Congress in form and function, although larger. The legislature has the power to pass laws that affect all EU member countries, but lacks the authority to draft them.
Like their American counterparts, they have many committees that meet occasionally, and on Monday, their Committee on Economic and Monetary Affairs met to discuss a few pressing matters including, for the first time ever, Bitcoin and virtual currencies.
The European Parliament's Committee on Economic and Monetary Affairs held the hearing in Brussels where attendees spent the first hour and a half, of their four-hour meeting, speaking and primarily asking questions about virtual currencies.
A little less than a dozen different politicians and regulators from various countries in the Eurozone contributed to the growing list of questions, that they want answered at some undecided future date. The few answers were given during the session, and general statements about virtual currencies, were almost uniformly pro-blockchain technologies.
The questions ranged in topic, with a vocal majority of them being on the subjects of tax evasion, money laundering, and regulation. Throughout the whole meeting, many supportive comments were made, with some advocating the use and protection of virtual currencies.
The session started off on a pessimistic note with Olivier Salles, European Commission Head of Unit Staff and Budget, bringing up many of the classic risks and fears associated with bitcoin. "They don't really protect the consumer and there are also some risks in terms of stability of the platforms, volatility of the price and also classic cyber-threats like theft, hacking and loss.
Salles then mentioned that they have no way of knowing when Bitcoin’s limit of 21 million coins will be reached, showing that he was unfamiliar with even the basics of how the cryptocurrency works. He also reported that the Commission was already considering whether there was any need to regulate virtual currencies, in response to November's terrorist attacks in Paris.
Sean Ennis, a senior economist from the Organisation for Economic Co-operation and Development (OECD), mentioned several optimistic viewpoints, including a desire to use blockchain analysis for fighting crime.
"Cash is likely to be a much more anonymous means of transferring value. The ownership string for virtual currency is public and that allows a tremendous amount of analysis of transactions."
- Sean Ennis, OECD Senior Economist
Jeremy Millar from Magister Advisors agreed with Ennis, stating that "It's easier to detect crime on bitcoin than it is in cash. Bitcoin is no longer a hacker community. It's run by big companies which try to comply with existing regulation." He mentioned the merits of virtual currencies in several areas, stating that any future regulations of Bitcoin would need to be finely targeted. "In my view there is no basis for a generic regulation of Bitcoin."
Siân Jones, an expert brought in from the European Digital Currency and Blockchain Technology forum took that sentiment to it’s natural conclusion: "If you're minded to propose legislative action, [...] limit such action to anti-money laundering and countering terrorist financing."
Perhaps the most insightful comments of the day came from Primavera De Filippi, a researcher for the National Centre of Scientific Research in Paris and Research Fellow at Berkman Center for Internet & Society at Harvard University. She pointed out the difference between passing laws and using code to regulate, a distinction that is also made in “Virtual Currencies and Beyond: Initial Considerations,” which was recently presented at the World Economic Forum by the International Monetary Fund Managing Director, Christine Lagarde.
De Filippi further said that blockchain technology can be regarded as "some kind of regulatory technology, enabling laws to be enforced more transparently and more efficiently.”
"It solves the problem of who watches the watcher."
- Primavera De Filippi
The German Socialist politician and economist, Jakob von Weizsäcker, appeared particularly well studied on the subject of blockchains, and quite bullish on bitcoin. He spoke in depth about the “profound transformation” to society that virtual currencies are likely to make, and he made a quick joke about bitcoin’s upcoming killer app, hoping “it doesn’t kill anyone in the process,” with a large smile on his face.
"There are many investors out there who have very high hopes that a particular application of this technology will be what they call a killer application,” von Weizsäcker added. “The real question is if and when one of these breakthroughs comes, how well are we prepared as governments, as legislators for that kind of revolution.”
Towards the end of the hearing, von Weizsäcker offered a proposal for general "precautionary monitoring," so that regulators “can keep abreast of developments in the industry,” which he made clear is moving quickly in unpredictable directions.
Looking forward, von Weizsäcker will author a report for the Parliament that investigates the many potential issues around virtual currencies and Bitcoin. A vote is then expected to be taken on the report’s suggestions in April. The winning regulatory ideas will be sent to the European Commission for consideration.
Throughout the meeting were many other notable quotes, including an admission that the European Parliament has never before met to discuss virtual currencies. For anyone who has an hour and a half to spare and would appreciate some insight about what the European governments think on the subject of Bitcoin and digital currencies, the video linked above is an interesting watch and might even be described as entertaining at times.