No Agreement Among Global Regulators How To Treat Cryptocurrencies
Bank regulators around the world haven't taken a unified approach to regulating and tolerating cryptocurrencies, according to a new study.
Adding to the chaos, individual countries often are changing their positions back and forth on Bitcoin and other cryptocurrencies in response to consumer demand and concerns about financial stability.
That was the central message in a report on cryptocurrency and central banks released Tuesday by the Brookings Institution.
The Brookings study said none of the central banks in the world's largest economies are giving serious consideration to having their own cryptocurrencies.
However, officials at the Federal Reserve, the Bank of Japan, Bank of Canada, Bank of England and the European Central Bank have indicated they are evaluating the pros and cons of central bank digital money.
In February, Venezuela became the first national government to issue an official cryptocurrency, the petro.
This month the petro became legal tender.
Brookings said the potential for enabling tax evasion and money laundering are two of the biggest worries central bank leaders have about cryptocurrencies.
The study said the majority of bank regulators, law makers and national government executive agencies around the world are taking a passive tolerance approach to cryptocurrencies.
The report noted Canada and Japan have laws regulating the trading and use of cryptocurrencies while South Korea's regulators are taking a dim view of them.
Counterfeiting was warned as a much greater potential problem for cryptocurrencies compared to paper money currencies because of hacking.
In a forum on the report, its author, Brookings Global Economy and Development Senior Fellow Eswar Prasad said the issue of trust is going to be very crucial to gaining wide-spread use of cryptocurrencies.
Prasad said a legal framework for cryptocurrency will be key for developing that trust.
A consortium of global regulators, The Bank of International Settlements, issued a whitepaper a month ago that cryptocurrencies issued by central banks hold promise as the use of cash rapidly disappears.
The report said fraud looms as a problem because large amounts of the digital currencies could be easily transferred.