This week, a number of regulators have provided more insight into their stance on bitcoin, the digital exchange mechanism. In general, the view is that bitcoins are not regulated and anyone who chooses to use them for purposes of exchange bears a risk in doing so.
– Bloomberg reports that the Chinese regulator, the People’s Bank of China, has said that bitcoin is not a real currency. It has warned consumers of the risks involved and has forbidden banks to handle bitcoin transactions.
– The French Central Bank issued a bulletin yesterday on the risks involved with virtual money, using bitcoin as an example. The regulator says that bitcoin does not constitute a means of payment under the law and is not electronic money. It also warns that the system could collapse at any moment if investors wanted to unwind their positions but found themselves holding portfolios that have become illiquid.
– The Dutch Minister of Finance and the central bank, in its role as a prudential supervisor, said on Tuesday 3 December that bitcoin does not constitute a payment mechanism, that there is no supervision for this scheme, and that users risk losing all their value when using bitcoin:
The development of virtual currencies is gaining momentum. At present, they fall outside of the scope of the Dutch Financial Supervision Act (Wet op het financieel toezicht or Wft). Consequently, DNB does not supervise virtual currencies or enterprises trading in them. DNB advises consumers to be aware of this and the potential risks of buying bitcoins or other virtual currencies. The exchange rates are volatile and there is no central issuing institution that consumers can hold liable should the need arise.
Moreover, the deposit guarantee scheme does not apply.
However, despite these clarifications, it is still possible that the media or political momentum may lead to a situation in which current regulations would be altered to include virtual currencies.
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