EBA: Investors should avoid Bitcoin, identifies 70 risks

EBA: Investors should avoid Bitcoin, identifies 70 risks

Summary: The European Banking Authority has outlined all the hazards associated with virtual currency, and called for an 'immediate response' to address the issue of regulation.

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TOPICS: EU, Banking, Government
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The European Banking Authority (EBA) has weighed in on the use of virtual currency, and recommends that Bitcoin be avoided until regulatory systems are put into place.

A document prepared by the EBA for address to the European Commission and European Parliament sets out the regulatory body's opinion (.PDF) on virtual currency — such as Bitcoin, Litecoin and Peercoin — and warns financial institutions to keep their distance until the industry is regulated.

The EBA is responsible for monitoring new and existing financial activities in the European region, with a view to promote the safety of financial markets and issue guidelines and recommendations to keep business flowing. The EBA did not take an interest in virtual currency until September last year, and issued a warning in December outlining the risks of investing in Bitcoin.

The EU financial and banking watchdog says that a "thorough assessment" of virtual currency (VC) needs to be undertaken, and the main question is whether cryptocurrency can, or should, be regulated.

The attraction of virtual currency is that the commodity is not regulated by a central bank or public body, and the currency can be stored on or offline through an eWallet. While some holders "mine" virtual currency through the Web, the most popular cryptocurrency is Bitcoin, and the majority of trade is undertaken through exchange posts such as the now defunct Mt. Gox — which filed for bankruptcy following the theft of its Bitcoin reserves. 

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... and yet we still choose novelty over risk. Businesses take note: virtual currency can result in imaginary profit.

Bitcoin's reputation was tarnished after the closure of the underground marketplace Silk Road, where many illegal trades, such as in guns and drugs, were undertaken using the cryptocurrency. Despite some belief that Bitcoin is only good for making transactions more difficult to track, it may also be used to shore up traditional currency where the economy is weak or developing — as the buyer of 30,000 confiscated Bitcoin from the Silk Road raid believes.

The EBA acknowledges that cryptocurrency has its uses, such as reduced transaction costs, faster transaction speed and financial inclusion, but says these benefits are "less relevant" in the European Union, "due to the existing and pending EU regulations and directives" that are explicitly aimed in improving these financial elements of the market.

In contrast, the EBA says it recognizes over 70 risks associated with the cryptocurrency trade; including risks to users, risks to non-market participants, risks to financial integrity and the potential increase of money laundering and financial crime. In addition, the watchdog says that traditional payment systems can be threatened by virtual currency, and regulatory authorities are also placed at risk.

A number of other factors also come into play, according to the EBA. The EBA says:

The risks include the fact that a VC scheme can be created, and then its function subsequently changed, by anyone, and in the case of decentralised schemes, such as Bitcoins, by anyone with a sufficient share of computational power; that payer and payee can remain anonymous; that VC schemes do not respect jurisdictional boundaries and may therefore undermine financial sanctions and seizure of assets; and that market participants lack sound corporate governance arrangements.

The EBA says that regulation is necessary, but a full, overarching regulatory body would be extremely expensive and complex — as well as take "considerable time to develop, fine-tune and implement" — and so short-term measures would currently be a better option for mitigating immediate risks.

The EBA recommended that national supervisory authorities discourage credit institutions, payment institutions and e-money institutions from buying, holding or selling VCs until regulation is pushed through. In addition, in order to "shield" traditional financial institutions, the EBA says that EU legislators should consider declaring VC traders, such as exchanges, "obliged entities" under the EU Anti-Money Laundering Directive.

This would make cryptocurrency trading posts and businesses that trade in VCs subject to anti-money laundering and counter terrorist financing requirements. Until this takes place, the financial watchdog says that financial institutions should not hold, trade or buy virtual currencies. However, current account relationships with businesses in the VC field should be allowed to continue.

Speaking to the Financial Times, Matthias Kroner, chief executive of Fidor Bank in Germany said:

'Constructive' regulation would be a bonus for the sector. An unregulated market without any minimum standards  [...]  would create a dangerous environment for the user.

While scattered businesses in the West have begun to experiment with Bitcoin, whether or not to view VCs as a legitimate currency is still under serious debate. Last year, China's central bank banned financial firms and account holders from handling transactions within the industry.

Topics: EU, Banking, Government

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14 comments
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  • Obviously

    Anyone with a marginal level of investment experience can spot a Ponzi scheme a mile away.
    Buster Friendly
    • Why do people think Bitcoin is a Ponzi scheme?

      Because they are confused with how a marketplace works. In a marketplace, let's say the stock market, your stock is not worth anything unless you can find a new buyer to purchase it from you. This does not make the stock market a ponzi scheme. It just means it's a marketplace. No one guarantees your return, and the stocks you hold have no value without new buyers. Same with Bitcoin. Does Bitcoin have problems/challenges to overcome? Of course, but being a Ponzi scheme is just not one of them.
      beachin99
    • Crapshoot Is Closer

      Since there are theoretically only 21M Bitcoins ever to be mined, it's a dead end closed system.
      In which the limited store of units are just bought and sold over and over.
      Price varying, even widely, subject to market forces, manipulation and fraud, just as any other currency, stock or commodity currently floated.
      So contrary to the original idealistic, even altruistic theory.
      PreachJohn
  • I'm not convinced that governments should regulate Bitcoin

    Bitcoin is a private initiative, so let its own users regulate it if they choose to. Government agencies should make it very clear that users of Bitcoin and other unofficial currencies do so entirely at their own risk. Those who want official guarantees should use official currencies.
    John L. Ries
    • Assuming that Bitcoin only affects itself and the users are ethical...

      ...that might be an entirely reasonable concept.

      But we don't live in that world, or in a world that even remotely resembles anything that might someday become a world like that.
      Jayleia
      • Nevertheless...

        ...I don't think it's the job of governments to make unofficial money safe to use; they have enough to do stabilizing their own currencies. And just about everything we do affects those around us (which is why there is no such thing as a victimless crime), but not everything that can negatively affect others can or should be restrained (in some cases, the cure is worse than the disease).

        By the same token, piracy (the real thing, not copyright infringement) costs real people real money and sometimes costs people their lives, but I don't think great efforts should be expended to protect ships flying flags of convenience. If a ship owner chooses to register his vessel in Liberia, then it's the job of the Liberian navy to protect it (is there one?), no one else's; if he wants the protection of his own country's navy, then he should cough up the money, put up with the regs (maybe even petition his own government for redress), and register his ship at home (no such thing as a free lunch).
        John L. Ries
  • Is consumer problem!

    Bitcoin can be a scam or for real but IS USER'S CONCERN!

    EBA of course wants to get its dirty hands there because they don't have any control there!

    EBA: KEEP YOUR DIRTY HANDS OFF!
    ssamayoagt
  • "KEEP YOUR DIRTY HANDS OFF!"

    The members of the EU are sovereign states with the authority to make whatever laws they think are proper, subject only to their own constitutions. If you don't live there, then it's really not your concern (it's not like commercial regulation is a human rights violation); and if you do, then you know who to contact.

    I don't think it's wise to try to regulate unofficial currencies, but governments certainly have the authority to do that.
    John L. Ries
    • Negating The Very Definition

      The establishment of any Gov't Regulations is the very antithesis of the original philosophical underpinnings and raison de etre.
      That is it was to be free of any kind of Established Government oversight. Sustained by built in failsafe mathematical measures that comfortably dictated self regulation alone as wholly adequate.
      PreachJohn
      • Correct

        Therefore, if Bitcoin succeeds, it should succeed on its own; if it fails, it should fail on its own.
        John L. Ries
  • PreachJohn: "built in failsafe mathematical measures"

    Bitcoin has bugs. One example:

    http://www.forbes.com/sites/andygreenberg/2014/02/13/silk-road-2-0-hacked-using-bitcoin-bug-all-its-funds-stolen/
    Rabid Howler Monkey
    • As I Said

      In my 1st Comment here, as elsewhere on this au current matter.
      I think it 's more of a crapshoot, a crock in terms of its ostensible theory.
      So I'm not surprised there's bugs yet. Just apprised thanks to you.
      PreachJohn
  • Answer to each of these risks

    Used abbreviations: VC - virtual currency, FC - fiat currency.

    Most of the listed risks are either:

    a) not applicable to VCs themselves, but to third-party services working with VCs. User doesn't need to use any third-party services to be able to use VCs.

    b) applicable not only to VCs, but to FCs as well.

    c) coming from the fact that the government (the regulators) did not manage to give clear regulations [b]in 5 years[/b].

    d) non-existent (false).

    I have underlined my answers to such risks.


    1. User suffers loss when an exchange is fraudulent (High)

    [u][i]True, but what does this have to do with VCs themselves? Don't use a centralized exchange who could steal or lose your VCs - that's one of the main points/advantages or VCs - you don't need to use any third parties.[/i][/u]

    2. User suffers loss when an ostensible exchange is not a genuine exchange (High)

    [u][i]True, but what does this have to do with VCs themselves? Don't use a centralized exchange who could steal or lose your VCs - that's one of the main points/advantages or VCs - you don't need to use any third parties.[/i][/u]

    3. User experiences drop in value of virtual currencies (VCs) due to (significant and unexpected) exchange rate fluctuation (High)

    [i]True, although this rate fluctuation has been upwards for most of the time.[/i]

    4. User holding VCs may unexpectedly become liable to tax requirements (Med)

    [u][i]True, but it is because the government did not manage to give clear regulations [b]in 5 years[/b]. This just shows the incompetence of the government. Government's incompetence is a risk to everything, not to just VCs.[/i][/u]

    5. User who is a member of a VC mining pool does not get fair share of mined VC units from a mining consortium (Low)

    [i][u]Technically true, but user can always choose to mine in a different pool, or no pool at all. Besides, user does not have to mine to be able to use VCs.[/u][/i]

    6. User suffers loss when buying VCs that do not have the VC features that the user expects (Med)

    [i][u]False. The user does not need to "expect" anything, because the source code of these VCs is open source, and could be read by anyone, letting the user to see for himself, what feature a VC has or doesn't have.[/u][/i]

    7. User's computing capacity is abused for the mining benefit of others (Low)

    [i][u]False. User does not need to give his computer capacity to mining to be able to use VCs. If he decides to do so, it is completely voluntary.[/u][/i]

    8. User suffers loss due to changes made to the VC protocol and other core components (High)

    [i][u]The same applies to USD. At least with VCs you have a saying in what changes will be made, and you can choose to reject them.[/u][/i]

    9. User is not in a position to identify and assess the risks arising from VCs (Low)

    [i][u]False. The source code of these VCs is open source, and could be read by anyone, letting the user to identify and assess any and all possible risks. The whole system is 100% transparent. On the other hand, this risk really applies to USD, where the workings of the system are hidden and not transparent.[/u][/i]

    10. User is in violation of applicable laws and regulations (Med)

    [u][i]True, but it is because the government did not manage to give clear regulations [b]in 5 years[/b]. This just shows the incompetence of the government. Government's incompetence is a risk to everything, not to just VCs.[/i][/u]

    11. User loses VC units through e-wallet theft or hacking (High)

    [i]True. [b]You[/b] have to learn to be responsible for [b]your[/b] own money. I know, it's a crazy idea, but get used to it.[/i]

    12. User loses VC units when exchange gets hacked (High)

    [u][i]True, but what does this have to do with VCs themselves? Don't use a centralized exchange who could steal or lose your VCs - that's one of the main points/advantages or VCs - you don't need to use any third parties.[/i][/u]

    13. User's identity may be stolen when providing identification credentials to access VCs (High)

    [u][i]True, but what does this have to do with VCs themselves? Don't use a centralized exchange who would require you to provide identification - that's one of the main points/advantages or VCs - you don't need to use any third parties.[/i][/u]

    14. Market participants suffer losses due to unexpected application of law that renders contracts illegal/unenforceable (Med)

    [u][i]True, but it is because the government did not manage to give clear regulations [b]in 5 years[/b]. This just shows the incompetence of the government. Government's incompetence is a risk to everything, not to just VCs.[/i][/u]

    15. Market participants suffer losses due to delays in the recovery of VC units or the freezing of
    positions (High)

    [u][i]True, but what does this have to do with VCs themselves? Don't use a centralized exchange who could delay/freeze your VCs - that's one of the main points/advantages or VCs - you don't need to use any third parties.[/i][/u]

    16. Market participants suffer losses due to counterparties/intermediaries failing to meet contractual settlement obligations (High)

    [u][i]True, but what does this have to do with VCs themselves? Don't use counterparties/intermediaries - that's one of the main points/advantages or VCs - you don't need to use any third parties.[/i][/u]

    17. Market participants suffer losses of VC units held in custody by others (Med)

    [u][i]True, but what does this have to do with VCs themselves? Don't let anyone else hold your VCs - that's one of the main points/advantages or VCs - you don't need to use any third parties.[/i][/u]

    18. Market participants suffer losses through information inequality regarding other actors (Med)

    [i][u]False. The source code of these VCs is open source, and could be read by anyone, letting the user to identify and assess any and all possible risks. The whole system is 100% transparent, so there could be no information inequality, because ALL information is available to ANYONE. Unless it means information inside centralized exchanges, in that case - don't use centralized exchanges.[/u][/i]

    19. User suffers loss when counterparty fails to meet contractual payment or settlement obligations (High)

    [u][i]True, but what does this have to do with VCs themselves? Don't use counterparties - that's one of the main points/advantages or VCs - you don't need to use any third parties.[/i][/u]

    20. User experiences fraud or loss of fiat currency (FC) when using VC cash machines (Med)

    [u][i]True, but what does this have to do with VCs themselves? Don't use VC cash machines - that's one of the main points/advantages or VCs - you don't need to use any third parties.[/i][/u]

    21. User has no guarantee that VCs are accepted by merchants as a means of payment on a permanent basis (High)

    [i]Technically true. For it to happen, every single merchant must stop accepting that particular VC after user receives it. The probability of that should be "extremely low", not "high".[/i]

    22. User suffers loss when VC payment they have made to purchase a good is incorrectly debited from their e-wallet (High)

    [i]True, but the only way it could happen, is by user error. [b]You[/b] have to learn to be responsible for [b]your[/b] own money.[/i]

    23. User is not able to convert VCs into fiat currency, or not at a reasonable price (High)

    [i]"Not able to convert VCs into fiat currency..." - technically true, but for that to happen, every single exchange/trader of that particular VC should close, and every user of that particular VC should stop accepting them (the probability of that should be "extremely low", not "high"); "...or not at a reasonable price" - who decides what is a reasonable price?[/i]

    24. User is unable to access VCs after losing passwords/keys to their e-wallet (High)

    [i]True. [b]You[/b] have to learn to be responsible for [b]your[/b] own money. At least with VCs you can make backups. You can't make backups with USD.[/i]

    25. User is not able to access VCs on an exchange that is a 'going concern' (i.e. has the resources to operate) (High)

    [u][i]True, but what does this have to do with VCs themselves? Don't use a centralized exchange who could steal or lose your VCs - that's one of the main points/advantages or VCs - you don't need to use any third parties.[/i][/u]

    26. User is not able to access VCs on an exchange that has gone out of business (i.e. does no longer have resources to operate) (High)

    [u][i]True, but what does this have to do with VCs themselves? Don't use a centralized exchange who could steal or lose your VCs - that's one of the main points/advantages or VCs - you don't need to use any third parties.[/i][/u]

    27. User suffers loss as a result of VC prices being manipulated (High)

    [i]True, although this rate fluctuation has been upwards for most of the time.[/i]

    28. User investing in regulated financial instruments (e.g. derivatives, SPS, CIS) using unregulated VCs suffers unexpected loss (Med)

    [i][u]I don't get this one, how does a user suffer loss? In any case, this obviously seems a problem with regulation or third parties, not VCs themselves.[/u][/i]

    29. User is misled by unreliable exchange rate data (Med)

    [u][i]True, but what does this have to do with VCs themselves? Don't use a centralized exchange who could give you false data - that's one of the main points/advantages or VCs - you don't need to use any third parties.[/i][/u]

    30. User suffers loss when investing in fraudulent VC investment schemes (Med)

    [i][u]The same applies to USD. VCs are not a cure for stupidity.[/u][/i]

    31. User is exposed to significant price volatility within very short time frames (Med)

    [i]True, although this price volatility has been upwards for most of the time.[/i]

    32. User cannot execute the VC exchange at the expected price (Med)

    [u][i]The same applies to USD and other fiat currencies. Obviously, VCs will not make the expectations of anyone who uses them to become magically true.[/i][/u]

    33. User is exploited by a VC Ponzi scheme (Med)

    [i][u]The same applies to USD. VCs are not a cure for stupidity. At least with VCs all transactions are publicly and permanently recorded for law enforcement to be able to track them.[/u][/i]

    34. Exchange is operationally unable to fulfill payment obligations denominated in VCs or FCs (Med)

    [u][i]True, but what does this have to do with VCs themselves? Don't use a centralized exchange who could be unable to fulfill payment obligations - that's one of the main points/advantages or VCs - you don't need to use any third parties.[/i][/u]

    35. Exchange is not in control of its operation (Med)

    [u][i]True, but what does this have to do with VCs themselves? Don't use a centralized exchange who could lose control of it's operations - that's one of the main points/advantages or VCs - you don't need to use any third parties.[/i][/u]

    36. E-wallet provider faces loss should their refund policies be abused to hedge currency transactions (Med)

    [u][i]True, but what does this have to do with VCs themselves? Don't use a centralized e-wallet provider who could control your VCs - that's one of the main points/advantages or VCs - you don't need to use any third parties.[/i][/u]

    37. After accepting VC for payment, merchant is not reimbursed (Med)

    [i][u]I don't get this one. Why should a merchant be reimbursed? The transfers of VCs are generally irreversible, so I don't see any situation where a merchant (not a user) should/could be reimbursed.[/u][/i]

    38. Unlike a FC, the merchant cannot be certain that they can spend the VCs received (Med)

    [i]Technically true. For it to happen, every single VC user/merchant/developer must stop using/accepting/developing that particular VC after the merchant receives it. The probability of that should be "extremely low", not "med".[/i]

    39. The merchant cannot be certain of the FC purchasing power of the VCs they have received (Med)

    [i][u]False. The merchant can accept VCs and have them automatically and immediately converted to FCs, negating any risk of purchasing power change. [/u][/i]

    40. Merchant faces compensation claims from customers if transactions have been wrongly debited (Med)

    [i][u]False. Transactions of most VCs are public, and can be checked by anyone. For that reason, it is impossible they they are "wrongly debited".[/u][/i]

    41. Wallet provider loses e-wallets provided for individuals (High)

    [u][i]True, but what does this have to do with VCs themselves? Don't use a centralized e-wallet provider who could control and/or lose your VCs - that's one of the main points/advantages or VCs - you don't need to use any third parties.[/i][/u]

    42. Scheme governance authority fails to meet payment and other obligations (High)

    [i][u]False. There is no "scheme governance authority". It simply does not exist. That's one of the main points of VCs - "scheme governance authorities" has been replaced by public and 100% transparent (open source) mathematical algorithms.[/u][/i]

    43. Scheme governance authority is subject to unexpected civil/criminal liability that brings the VC scheme to a halt (Med)

    [i][u]False. There is no "scheme governance authority". It simply does not exist. That's one of the main points of VCs - "scheme governance authorities" has been replaced by public and 100% transparent (open source) mathematical algorithms.[/u][/i]

    44. E-wallet provider faces compensation claims from customers if functionality of wallet is compromised or fails to provide expected functionality (Med)

    [u][i]True, but what does this have to do with VCs themselves? Don't use a centralized e-wallet provider who could control and/or lose your VCs - that's one of the main points/advantages or VCs - you don't need to use any third parties.[/i][/u]

    45. Criminals are able to launder proceeds of crime because they can deposit/transfer VCs anonymously (High)

    [i][u]False. The transactions of most VCs are public and pseudonymous, not anonymous. Besides, "laundering money" means "making illegally gained money legal". Simply hiding money is not "money laundering", because it does not make them legal.[/u][/i]

    46. Criminals are able to launder proceeds of crime because they can deposit/transfer VCs globally, rapidly and irrevocably (High)

    [i][u]False. "Laundering money" means "making illegally gained money legal". Being able to deposit/transfer VCs globally, rapidly and irrevocably is not "money laundering", because it does not make them legal.[/u][/i]

    47. Criminals/terrorists use the VC remittance systems and accounts for financing purposes (High)

    [i][u]The same applies to USD. At least with VCs all transactions are publicly and permanently recorded for law enforcement to be able to track them.[/u][/i]

    48. Criminals/terrorists disguise the origins of criminal proceeds, undermining the ability of enforcement to obtain evidence and recover criminal assets (High)

    [i][u]The same applies to USD. At least with VCs all transactions are publicly and permanently recorded for law enforcement to be able to track them.[/u][/i]

    49. Market participants are controlled by criminals, terrorists or related organizations (High)

    [i][u]The same applies to USD. At least with VCs all transactions are publicly and permanently recorded for law enforcement to be able to track them.[/u][/i]

    50. Criminal uses VC exchanges to trade illegal commodities and abuse regulated financial sector at point of entry (High)

    [i][u]The same applies to USD [exchanges]. At least with VCs all transactions are publicly and permanently recorded for law enforcement to be able to track them.[/u][/i]

    51. Restorative justice of victims of crime is hindered by criminal using VCs to avoid seizure of assets, confiscation and financial sanctions (High)

    [i]True, but at least with VCs all transactions are publicly and permanently recorded for law enforcement to be able to track them.[/i]

    52. Criminal can use VCs for anonymous extortion (High)

    [i][u]The same applies to USD. At least with VCs all transactions are publicly and permanently recorded for law enforcement to be able to track them.[/u][/i]

    53. Criminal organizations can use VCs to settle internal or inter-organizational payments (Med)

    [i][u]The same applies to USD. At least with VCs all transactions are publicly and permanently recorded for law enforcement to be able to track them.[/u][/i]

    54. VCs make it more feasible for individuals to engage in criminal activity (High)

    [i][u]False. How do they make it more feasible? Cash transactions leave no record or trace, all VCs transactions are publicly and permanently recorded for law enforcement to be able to track them.[/u][/i]

    55. Hacking of VC software, wallets or exchanges allows a criminal to implicate others in the criminal activities they commit (Med)

    [u][i]True, but what does this have to do with VCs themselves? Don't use a centralized software/wallets/exchanges - that's one of the main points/advantages or VCs - you don't need to use any third parties.[/i][/u]

    56. Criminals, terrorist financiers and even entire jurisdictions are able to avoid seizure of assets, confiscation, embargos and financial sanctions (incl. those imposed by IGOs) (Med)

    [i]True, but at least with VCs all transactions are publicly and permanently recorded for law enforcement to be able to track them.[/i]

    57. Criminals are able to create a VC scheme (High)

    [i][u]The same applies to USD. At least with VCs all transactions are publicly and permanently recorded for law enforcement to be able to track them.[/u][/i]

    58. Tax evaders are able to obtain income in VCs, outside monitored FC payment systems (Med)

    [i][u]Technically true. The same applies to USD (cash). With VCs all transactions are publicly and permanently recorded for law enforcement to be able to track and monitor them much more thoroughly than any FC system would ever allow.[/u][/i]

    59. Payment service providers (PSPs) that use FC and also provide VC services suffer losses due laws that render VC contracts illegal (Low)

    [u][i]True, but it is because the government did not manage to give clear regulations [b]in 5 years[/b]. This just shows the incompetence of the government. Government's incompetence is a risk to everything, not to just VCs.[/i][/u]

    60. PSPs that use FC and also provide VC services fail due to liquidity exposures in their VC operations (Low)

    [u][i]True, but what does this have to do with VCs themselves? Don't use a centralized PSP - that's one of the main points/advantages or VCs - you don't need to use any third parties.[/i][/u]

    61. PSPs that offer VC payment services suffer loss of reputation when VC payments fail, because they gave the impression that VCs were regulated (Med)

    [u][i]True, but what does this have to do with VCs themselves? Don't use a centralized PSP - that's one of the main points/advantages or VCs - you don't need to use any third parties.[/i][/u]

    62. Businesses in the real economy suffer losses due to disruptions in financial markets that were caused by VC assets blocked, delayed, etc. (Low)

    [i][u]False. VC transactions are technically impossible to block/delay (at least for a long time).[/u][/i]

    63. Regulators decide to regulate VCs but the chosen regulatory approach fails (Med)

    [u][i]True, but it is because the regulators did not manage to give clear regulations [b]in 5 years[/b]. This just shows the incompetence of the regulators. Regulator's incompetence is a risk to everything, not to just VCs.[/i][/u]

    64. Regulators do not regulate VCs but the viability of regulated financial institutions is compromised as a result of their interaction with VCs (Med)

    [u][i]True, but it is because the regulators did not manage to give clear regulations [b]in 5 years[/b]. This just shows the incompetence of the regulators. Regulator's incompetence is a risk to everything, not to just VCs.[/i][/u]

    65. Regulation and supervision of conventional financial activities is circumvented by unregulated 'shadow' activities that incur the same risks (Med)

    [u][i]True, but it is because the regulators did not manage to give clear regulations [b]in 5 years[/b]. This just shows the incompetence of the regulators. Regulator's incompetence is a risk to everything, not to just VCs.[/i][/u]

    66. Regulator is subject to litigation as a result of introducing regulation that renders pre-existing contracts illegal/unenforceable (Low)

    [u][i]True, but it is because the regulators did not manage to give clear regulations [b]in 5 years[/b]. This just shows the incompetence of the regulators. Regulator's incompetence is a risk to everything, not to just VCs.[/i][/u]

    67. Should the regulator decide to regulate VCs more leniently than FCs, an unequal playing field in the market for payment services will emerge (Med)

    [u][i]True, but it is because the regulators did not manage to give clear regulations [b]in 5 years[/b]. This just shows the incompetence of the regulators. Regulator's incompetence is a risk to everything, not to just VCs.[/i][/u]

    68. If an unequal playing field is retained, the intensity of competition in the market for FC payment services diminishes as providers exit FC markets (Med)

    [i]True, it's called progress. Obsolete technologies are replaced by newer and better ones all he time.[/i]

    69. Regulators prevent potential new entrants to payment services market if the regulatory approach to VCs is excessive (Med)

    [u][i]True, but it is because the regulators did not manage to give clear regulations [b]in 5 years[/b]. This just shows the incompetence of the regulators. Regulator's incompetence is a risk to everything, not to just VCs.[/i][/u]

    70. Should VCs gain widespread acceptance, central bank as issuer of FC can no longer steer the economy, as the impact of its monetary measures become difficult to predict (Low)

    [i]True. That's a good thing, and a reason for this list.[/i]
    bitcoinLT.org
    • Comment's structure fail

      It seems that zdnet comment section does not allow BBCode, so my comment got messed up (with [u] and other code not doing what it should, but simply being printed out). Since there is no "edit" button, nor a "delete" button, I can't fix it. Sorry.
      bitcoinLT.org