ECB Wants To Curb Bitcoin Use Over Fears It May "Lose Control Over Money Supply"

Tyler Durden's picture

The first time the ECB officially warned about the dangers of virtual currencies in general, and in particular, bitcoin - what was then a mostly unknown currency trading in the single digits (in USD terms) - was in November 2012 when in a report called "Virtual Currency Schemes" it warned that "in an extreme case, virtual currencies could have a substitution effect on central bank money if they become widely accepted. The increase in the use of virtual money might lead to a decrease in the use of “real” money, thereby also reducing the cash needed to conduct the transactions generated by nominal income. In this regard, a widespread substitution of central bank money by privately issued virtual currency could significantly reduce the size of central banks’ balance sheets, and thus also their ability to influence the short-term interest rates. Central banks would need to look at their existing tools to deal with this risk (for instance, trying to impose minimum reserve requirements on virtual currency schemes)."

Ironically, since then the ECB has moved significantly down the narrative of currency substitution, and in fact, following a recent push to eliminate paper currency (now that the €500 bill is no longer produced) the central bank has been urging for a shift away from real, paper money and into electronic variants.

However, overnight in a surprising reminder how the European central bank feels about bitcoin and other virtual money, the ECB urged EU lawmakers to tighten proposed new rules on digital currencies such as bitcoin, fearing they might one day weaken its own control over money supply in the euro zone.

In other words, first the ECB went after cash; now it is going after all virtual currencies like bitcoin.

According to Reuters, the European Commission's draft rules, aimed at fighting terrorism, require currency exchange platforms to increase checks on the identities of people exchanging virtual currencies for real ones and report suspicious transactions.

In a legal opinion published on Tuesday, the ECB said EU institutions should not promote the use of digital currencies and should make clear they lack the legal status of currency or money.

"The reliance of economic actors on virtual currency units, if substantially increased in the future, could in principle affect the central banks’ control over the supply of money ... although under current practice this risk is limited," the ECB said in the opinion for the European Parliament and Council.

"Thus (EU legislative bodies) should not seek in this particular context to promote a wider use of virtual currencies."

The ECB argues the Commission's proposal does not go far enough as it does not cover the use of virtual money to buy goods and services. "Such transactions would not be covered by any of the control measures provided for in the proposal and could provide a means of financing illegal activities."

In short, while the ECB would love to ban cash which is a major stumbling block to the bank's NIRP strategy, its proposed alternative is not virtual currencies, despite various such suggestions most notably by the BOE, but merely retaining currency if entirely in electronic form, think only debit and credit card transactions, which in turn allow every single operation and transaction to be tracked (and taxed) by both the central bank and local governments with pinpoint accuracy.

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thesonandheir's picture

A deflationary currency really scares them eh?

philipat's picture

This has always been the concern with Bitcoin. Stick to Gold.

Looney's picture

 

The ECB will fight tooth and nail to keep the control of Money Supply.

Well, instead of “tooth and nail”, make it “dentures and nail”.   ;-)

Looney

Manthong's picture

Oh you don't even want to see or smell that dentition.

 

And...

WTF  do they have to worry about if their monetary “policy” is correct and effective ???

 

jaap's picture

I do not want to relay on banks for sending my currency around the world. It takes them days, and costs me an arm and a leg.

It is just a means of transport for me, I do not leave the system. But where bank perform lousy, the market has a sollution.

MillionDollarBonus_'s picture

Bitcoin is monetary terrorism. How can you allow people to trade in a currency that is untraceable by government authorities and is frequently used for money laundering and criminal activity? When cash is outlawed and we have a global digital currency, you will be able to get all the benefits of bitcoin without the criminality. If people want to use an international digital currency, then they need to support a global central bank and government. Until this is implemented, currencies like bitcoin simply have to be banned.

Send Russia a Message by Electing Hillary This November

nuubee's picture

Yes, the best thing about government, is that it's always 1 more law away from paradise, just one more law banning something, or controlling something, and humans would be living in paradise. Just 1 more law, and the people up for election will bring it to you, they "promise"

Manthong's picture

Y’know, the other day I was thinking of buying a few million worth of 30 Year Euro valued bond’s at .005  negative interest.

Sounded like a great deal compared to the other Euro alternatives.

But then I said to myself.. WTF would anybody with even half a freaking brain do that?

If you know, please educate me.

yogafan's picture

...because there's always a greater fool to sell to at profit... until there isn't.

Making Merica Great Again's picture

One can simply not run out of fools.

JohnGaltUk's picture

What about the terrorists that are using it to buy AK47's. If they block of this route for the terrorists there will be more incidences of truck attacks in Nice

Pasadena Phil's picture

Oh please. The US government is arming just about everyone everywhere and our TBTF banks were created for the very purpose of winning the money laundering sweepstakes. Bitcoin has actually reduced crime associated in the illegal drug trade and is often cited as a reason why the so-called "war on drugs" itself is the cause for most of America's violence. Educate yourself on the history of "Silk Road". Wired magazine did excellent reporting on the kangaroo court trial of their founder a few years ago. It's an eye-opener.

Bitcoin is how the new underground economy will eventually drain off and replace the corrupt official totalitarian economy. The only way to stop it will be to shut down the internet itself which would take down civilization itself. So then no one has an economy and we are back to bartering and "dem wit da guns make da rules". Progressives. What would we do without them?

Stanelli's picture

Do you really believe that when you try and bribe some quartermaster in some military base hundreds kilometers from civilization to get your hands on an AK, you would use... a bitcoin? No, that's not the currency for such things.

sleigher's picture

"untraceable by government authorities"

When did government officials become government authorities?  I think it was the late 80's, maybe early 90's?  Officials used to represent us, now they are the authority.  Like a bunch of cops.

Stanelli's picture

Welcome to the neo-feudalism. Make yourself comfortable, because you're not going out anywhere soon.

Manthong's picture

@ MDB

I love your commentary.

I send it to the tablet in the bathroom.

The laughter is greatly helpful to bowel movement.

: -D …. Keep up the good work.

 

BTW... I do wipe the tablet with 70% Isopropyl frequently.

 

csmith's picture

You mean...like...with a cloth???

Manthong's picture

Hell no...

disposable tissues.

butt as long as I am the subject....

few people realize how disconcerting it is to be sitting on the toilet in the convention center and listening to some loud mouth schmuck in the next stall revealing his business secrets because he feels the need to use his phone then and there.

Diatom's picture

Activating now "ignoring Million dollar bonus comments" mode permanently...

 

dumbhandle's picture

You and your murdering commies cannot do anything to stop cryptocurrency from taking over fiat completely.  It's only a matter of time, unfortunately for you.  The curious should look into Monero - it is not traceable like Bitcoin and Ethereum.  USD to bitcoin via Coinbase.com to Monero via Poliniex.com.

jakesdad's picture

you aren't scott adams, are you?  he's mentioned before about his love for long-running pranks he's the only one in on & you seem to fit the profile pretty well...

vbouwmeester's picture

You seem pretty well brainwashed bro

TheVillageIdiot's picture

And you sir, are a mental terrorist and should be sent to jordan for some enhanced interrogation followed by a slow, painful execution.

 

No international forensic audit, ever, has uncovered a bitcoin or digital currency fraud rate approaching anything like standard SWIFT banking INSIDE the USA. Reviewing the last five annual audits for regulatory analysis in Canada, USA, Japan, China - all came back with lower rate of fraud and non-compliant transactions... you see you fucking dildo - the advantage of their system of distributed platforms provides instant transaction - and 100% transparency - not confidentiality. Fuck you stupid tool... 

 

 

TheVillageIdiot's picture

And you sir, are a mental terrorist and should be sent to jordan for some enhanced interrogation followed by a slow, painful execution.

 

No international forensic audit, ever, has uncovered a bitcoin or digital currency fraud rate approaching anything like standard SWIFT banking INSIDE the USA. Reviewing the last five annual audits for regulatory analysis in Canada, USA, Japan, China - all came back with lower rate of fraud and non-compliant transactions... you see you fucking dildo - the advantage of their system of distributed platforms provides instant transaction - and 100% transparency - not confidentiality. Fuck you stupid tool... 

 

 

Douglas1949's picture

You clearly do not understand bitcoin.  Make the effort or you will be sorry in time.

spqrusa's picture

The MoronDollarBonus's goal is to goad the gullible. His point is to never understand anything but to obfuscate the debate like Democrats, most Republicans and nearly all Politicians, Criminals, Intelligence Agencies, etc...

Erek's picture

They want to keep "control" of the money system?

They have a hard enough time keeping control of themselves.

Everything would be fine if the CBs would just go away and not try to control anything except their bladders.

falak pema's picture

Putting the "stamp" on what is money has been a regal right since Athenian times; even earlier. A mint to stamp your effigy was proof of royalty.

So the EU believes it is a regal setup; just like the Bank of England represents the  Windsor Queen; not the defunct pop group who sang "we are the champions" until he got "aided" out of life like a blocked chain.

I'm not a royalist... so a chain of intelligence if honest is no chastity belt to my desire of doing what i like with it.

MoonSun's picture

I don't think central banks will fight. By now it is well accepted that Bitcoin has brought a paradigm shift which is not restricted to the monetary realm. Insurance, notaries and audits will be disrupted. Bitcoin will achieve what tonnes of regulations and resources have not: it will eliminate institutional fraud on equities and other financial instruments. No central bank will have the courage to oppose this kind of change.

Haus-Targaryen's picture

It is good to have both.  Qubes + a burner laptop JUST for BTC and LTC is a great way to diversify. 

TheytookERjobs's picture

Bitcoin stone age compared to other cryptos now. Gold is also stone age in this technology era

800409523's picture

Gold can be confiscated, bitcoin can't. 

Volaille de Bresse's picture

"Gold can be confiscated, bitcoin can't"

 

Bitcoin can be blocked online, gold isn't online...  ;-)

Troy Ounce's picture

 

 

You can eat gold: www.ediblegold.com

Try that with bitcoin!

 

AlaricBalth's picture

You are assuming the power grid will be reliable in an emergency or other exogenous event.

spqrusa's picture

Really? Bitcoin can't be confiscated"?

US Marshalls "confiscated" Ross Ulbricht's (Silk Road) Bitcoin. Mark Karpeles "confiscated" Mt. Gox user's Bitcoin. Bitfinex hacker "confiscated" Bitcoins ($75 million) and on and on...

jmack's picture

yea, because governments have never passed any laws restricting privite citizens use of gold...

nomofiat's picture

and how is that not a concern for gold?

 

It is not as if gold has never been banned before. How will you move or spend your gold in such an environment

 

At least with bitcoin you can always take your wealth to friendlier places.

RaceToTheBottom's picture

The fact that they have not brought up GOLD but have brought up both cash and bitcoin does concern me.  I see it as they already have solutions to control gold.

Fiat currencies need to kill all competitors, which means gold.  When you can print unlimited and then use that to short unlimited via paper gold gives you a lot of control over gold.  When china has signed up to perform the same control means there will not be a savoir coming in from the outside.

This is very depressing for gold...

 

Mustafa Kemal's picture

"This has always been the concern with Bitcoin. Stick to Gold.

In addition to PMs, I also stack bitcoin and ether, although neither of them go clink when I stack one.  They are contrary to the central banks agendas and they are based on Blockchain technology, which has a real future. Its not clear they can stop them. Moreover, the more they try, the more valuable and useful they will become.

If you stack, and you are serious,  consider this. Just for argument say you have $40K in PMs,  then 5 percent of this is $2K. $2K of bitcoin could be totally wasted, but it also could make you, and more importantly, your children or grandchildren well off in future.

 

 

Urban Roman's picture

They keep saying they want a cashless economy.

Sometimes you get what you want.

revjimbeam's picture

Because tur'ism, fuck you

wholy1's picture

It's the CURRENCY supply and FIAT electronic credit accommodation that's being EXPLOITED.  "Control" - are you kidding me?!

FX223's picture

It's illegal unless it's "our virtual currency".

 

Fuck you CBs!

 

Stack and stash friends!

WTFUD's picture

Becoming more desperate by the day this bastion of democracy.

Ghordius's picture

meh. the ECB is urging EU institutions not to promote virtual currencies. it's not the same as curbing virtual currencies

the context of this is way more scary. look at Denmark, for example. they made it legal for shops to deny the acceptance of physical cash

again, meh. call me when the very same 500 euro bill is going to be recalled

Duty Chief's picture

ECB urging is for public consumption.  Behind the scenes is where the pressure gets applied.  ECB talks to beuracrats about who the favored institutions are and are not.  If you do not dance to the tune, they institute legislation that is a detriment to your business.

Most of the real pressure gets applied behind the scenes.  I would agree with you if the statements in the article could merely be taken at face value.  It has been my observation that there are always layers upon layers of interested and affected parties that really influence what ultimately becomes legislation, or in the case of the EU, rules.