Risks raised by virtual currencies to be analysed by European banking regulator

EBA has stated that it would set up a task force in Q1 2014 to review policy options.

The EBA’ present concern, voiced via its proper website, is whether virtual currencies can and ought to be subject to regulations. Virtual currencies have come under increased scrutiny from regulators and prosecutors around the globe. Mt. Gox, a Bitcoin exchange company, has filed for bankruptcy in Japan claiming that it has lost 850,000 Bitcoins. China’s central bank forbade financial institutions from getting involved in virtual currency transactions in 2013.

According to EBA, investors are subject to potential risks in trading derivatives based on Bitcoin. In addition, regulators could have proper anti-money laundering initiatives that can be avoided by virtual currencies.

EBA was set up in 2011 to harmonize banking rules across the 28-member European Union.