Business

Friday 30 September 2016

European banks alert over risks link to bitcoin

Simon Rowe

Published 14/08/2016 | 02:30

The Central Bank of Ireland has warned consumers about the risks of VCs (virtual currencies) by republishing the European Banking Authority's warning (Stock picture)
The Central Bank of Ireland has warned consumers about the risks of VCs (virtual currencies) by republishing the European Banking Authority's warning (Stock picture)

The Central Bank has joined with European regulators in warning of the dangers of bitcoin and its risk of being linked to money laundering, financial crime and terrorist financing.

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The warning comes just days after the European Banking Authority (EBA) backed European Commission plans to bring virtual currency exchanges and bitcoin wallet providers under the regulation of new anti-money laundering laws.

A Central Bank spokeswoman said: "At present, virtual currencies (VCs) including bitcoin, remain unregulated in Ireland and there are no regulatory protections for consumers when holding or transacting in VCs. The Central Bank of Ireland has warned consumers about the risks of VCs by republishing the European Banking Authority's warning."

Prompted by terrorist attacks in France, the European Commission has moved to fast-track its action plan to combat the financing of terrorism, which was published in February.

The commission, backed by the EBA, is keen to reach EU-wide consensus on tackling "vulnerabilities in Europe's fight against terrorist finance, including in relation to the anonymity associated with the purchase and use of virtual currencies".

Ireland's Central Bank confirmed it has "a number of teams" studying present and future threats regarding virtual currencies. Its teams of experts advise regulators on how to ensure greater consumer protection, regulation and systemic financial integrity.

"As financial technology affects a wide range of financial services firms, the work extends beyond virtual currencies and also includes the authorisation process for new firms with non-traditional business models wishing to establish in the jurisdiction," said a spokeswoman.

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