European Central Bank President Declares ECB Helpless To Regulate Bitcoin

The president of the European Central Bank, Mario Draghi, has conceded that the bank has no power to regulate bitcoin and other cryptocurrencies, confirming a perspective long held by proponents of the currency.

He made the comments in front of the Economic and Monetary Affairs Committee of the European Parliament, pointing out that it is beyond the powers of the bank to “prohibit and regulate” bitcoin and other digital currencies.

The comments came in response to a question about whether the ECB was planning any attempts at regulation for the currency, and whether he felt greater capital requirements were necessary for businesses intending to operate within the fintech sector.

The revelation comes at a time when governments and banking authorities in various countries are attempting to draft proposals for containing bitcoin markets, despite widespread recognition of the impossibility of regulating decentralized currencies.

The structure of bitcoin and currencies like it does not rely on any third-party bank or processor, and the decentralized, global nature of the market means there is no practical way in which governments or central banks can effectively regulate cryptocurrency transactions or markets.

However, undeterred, a number of countries are presently drafting or considering measures that would seek to increase regulation in the space. The comments from Draghi were interpreted positively by the crypto markets, with bitcoin in particular enjoying a price boost in response to his views.

Draghi disclosed that the ECB had yet to formally consider the implications of the new technology, but that it would likely analyze cryptocurrency risks, economic impact and practical use cases.

He went further, suggesting cryptocurrencies were too premature to be labeled a viable means of paying for goods and services, while recognizing the bank’s impotence in shaping the development of the markets long term.

Speaking to his concerns about the rise of cryptocurrency, Draghi said the bank remained cautious on the cybersecurity implications of the currency, and said that any future investigations into blockchain technology would center around security issues.

The news has been welcomed by cryptocurrency traders, and marks a departure from earlier comments from the bank’s vice-president linking the rise of cryptocurrency to “tulip mania” in the 17th century.