EU lawmakers hold off on blockchain regulation

Rage Commentary : The EU proposed to postpone the formulation of blockchain (the technology that supports Bitcoin) regulations because regulators and policymakers do not want to stifle innovative thinking, nor do they want to lose in the competition to develop financial technology or Internet finance. One of the reasons why detailed regulatory systems cannot be formulated at present is that it is not known what the most important applications of blockchain technology are. The UK Financial Conduct Authority stated that before considering new rules, it will allow consumers to test Internet financial innovations in a controlled environment (or sandbox).

Translation: Nicole

The European Union should delay regulating blockchain, the technology that underpins bitcoin, the bloc’s parliament agreed on Tuesday to a plan by authorities to move cautiously toward financial services policy.

Jakob von Weizsaecker, a German leftist member of the European Parliament, told Reuters:

“We don’t want to pre-empt blockchain regulation, but we want to pre-empt oversight.”

The parliamentary economic affairs committee backed his report on the digital currency bitcoin and blockchain, also known as distributed ledger technology.

Regulators and policymakers do not want to stifle innovative thinking, but they also do not want to lose out in the race to develop financial technology or internet finance.

Blockchain proponents say the technology could "disrupt" the financial industry by slashing the costs of settling payment transactions and stock trades.

Jakob von Weizsaecker

Jakob von Weizsaecker says:

“One of the reasons why we can’t develop detailed regulation right now is that we don’t yet know what the most important applications of blockchain technology will be.”

His report, which is non-binding but could later help shape draft EU legislation, calls on the European Commission to set up a task force to oversee blockchain technology.

The task force should recommend any necessary legislation but should refrain from overreaching on blockchain, which has many opportunities for consumer and economic growth, the report said.

Christopher Giancarlo, a member of the U.S. Commodity Futures Trading Commission, said last month that regulators should not hinder blockchain technology and should give it enough room to develop.

Britain's Financial Conduct Authority said it would allow internet finance innovations to be tested with consumers in a controlled environment, or sandbox, in May before considering new rules.

But SWIFT, a global electronic messaging system used by 11,000 banks, said this month that blockchain technology was not yet mature enough to meet the requirements of the financial community, although others said it was only a matter of time.

The Wall Street veteran and blockchain startup leader said in London last week:

“Some of the new and untested or proven technologies that are currently available, including distributed ledger technology, will become mainstream technologies in the next decade.”

Masters added that uncertain regulation could hinder the development of blockchain technology.

The European Central Bank said on Monday it was experimenting with blockchain technology, and the Bank of England is also studying the consequences of updating its payment system.

Andrew Hauser

BoE executive director of payments Andrew Hauser said last week that authorities should keep an eye on blockchain technology.

Hauser joked about how ride-hailing apps could shake up the taxi industry:

“The central bank cannot become an app like Uber.”