Germany Says Cryptocurrencies Aren’t a Danger to Financial Stability
The German Federal Government was recently examining whether Bitcoin and other cryptocurrencies pose a threat to the financial stability of a country or not, and as per the reports on June 12, it was found that there are no such risks involved.
The response was in reaction to the questions asked by the third largest political party in Germany’s Parliament, Alternative for Germany (AFD).
According to the report, the conclusion was reached, “due to the small market capitalization of Bitcoin and other crypto tokens and the limited interlinkages with the financial sector.”
However, the German government cannot reliably estimate the scope of illicit activities such as money laundering and terrorist financing.
In response to the questions about potential future regulations and laws to mitigate risks associated with cryptocurrencies, the report lists the actions already taken, including all the legal requirements for cryptocurrency trading platforms to get a license from the BaFin Financial Supervisory Authority. It also highlights a number of cases in which pre-existing laws have been used to police cryptocurrency-related crimes. It also points out that BaFin has already issued warnings about initial coin offerings but, due to the “global tradability” of these offers, a coordinated effort between national governments would be required to be more effective.
Germany, which is currently the economic powerhouse of Europe, has significant influence across the European Union, due to having the highest GDP of the EU (followed by the United Kingdom, and France respectively).
Though Germany is relatively tolerant of cryptocurrencies, their attitudes are still mixed across the government and financial institutions. This recent report echoes German president Frank-Walter Steinmeier’s February statements comparing cryptocurrencies to “betting games.”
A few weeks prior to President Steinmeier’s assertion, the board member of Germany’s Central Bank Joachim Wuermeling said, “Given that cryptocurrencies are a global phenomenon, unilateral action by just one country or regulator would be ineffective.”