In the recently held Bitcoin Finance conference and expo Gareth Murphy, senior Central Bank of Ireland official, delivered a speech and admitted that virtual currency industry could diminish a bank’s ability to influence the overall economy’s price of credit as well as undermine the sovereignty of states.
Currently, the Central Bank of Ireland doesn’t recognize Bitcoin or any other similar digital currencies as legitimate currencies; thus, consumers cannot seek protection in the event of a loss in digital holdings, theft or the shutdown of an exchange website. Not just protection, the government has also anti-money laundering laws at place to stop Bitcoin.
Gareth Murphy says that once more consumers start wanting to transact different goods and services then anti-money laundering schemes will be brought to the test. He says that economic activity is the aggregate of domestic transactions in the ‘euro-denominated economy’ and the ‘virtual currency economy.
However, according to this is likely to have a profound operational impact on these firms and their regulatory risk profile as well. To provide protection to consumers, the European Banking Authority (EBA) issued a warning to highlight the possible risks they could face when buying, holding or trading virtual currencies such as Bitcoin.
EBA then had said that virtual currencies continue to hit the headlines and are enjoying increasing popularity. However, consumers need to be aware of the risks associated with virtual currencies, including losing their money. The banking authority then had said that no specific regulatory protections existed that would cover consumers for losses.
Consumers Cannot Claim for the Losses incurred in Bitcoin Transactions
Thus, the EBA clearly and flatly rejected and said that if a person loses his money at a platform that exchanges or holds their virtual currencies, it could not take any action. It assessed all relevant issues associated with virtual currencies to identify whether virtual currencies can and should be regulated and supervised.
After citing various risks and challenges to consumers transacting Bitcoin, the EBA gave several recommendations to avoid any financial losses they may incur if they use the digital currencies. It said that if customers are buying virtual currencies they should be fully aware and understand their specific characteristics.
The agency had further said that customers should not use ‘real’ money that they cannot afford to lose and exercise the same caution with digital wallet as they generally do with their physical wallet. The customers were also suggested to keep only small amount in one wallet and keep several wallets.
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