Of central concern to financial regulators worldwide is how to deal with cryptocurrencies. Are they assets, or currencies, or something entirely new which has to be dealt with on its own terms? This week the British government announced that its Treasury Select Committee was conducting an enquiry on all things crypto to try to come up with some answers. As for the Austrians, they’re looking to gold as a model.
Hartwig Loeger, the Austrian finance minister, has announced that they are approaching cryptocurrencies as assets and are looking to precious metals and derivatives as inspiration for how to regulate virtual currencies. These asset classes are currently subject to a lot more oversight than Bitcoin.
Austrian authorities are most worried about money laundering. According to Loeger, “cryptocurrencies are significantly gaining importance in the fight against money laundering and terrorism financing,” and that, “we need more trust and more security.”
Taking a page from the rules governing gold, jewellery and cash, Loeger suggests that for large trades (more than €10,000), the trader would have to report the transaction, including its counterparty, to the financial regulator, the FMA. The FMA would have oversight over cryptocurrency exchanges.
Loeger also hopes to tame the sometimes wild ICO market by making it subject to the same rules that apply for share or bond offerings, for instance, penalising front running or insider trading. Austrian ICOs would be obliged to publish a “digital prospectus” that would need FMA approval before any offering could take place.
Loeger will be meeting with Mario Centeno, his Portuguese equivalent to discuss how a European approach to cryptocurrencies might be developed.
The FMA is becoming increasingly experienced in dealing with some of the unscrupulous actors in the cryptocurrency space. They have recently been investigating a suspected Ponzi scheme known as “Optioment” after Austrian police had received hundreds of complaints from disgruntled investors. It appears that the fraud cost Austrians up to 12,000 Bitcoin, or around $120 million.
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