Burkhard Balz, a representative of Deutsche Bundesbank, the central bank of Germany, stated that cryptocurrencies do not pose a threat to the financial stability of the country. The matter was discussed with the European Parliament on July 9th, 2019, and immediately, the news got media attention. Several German websites and other mediums highlighted the discussion on the next day.

Burkhard Balz is a member of the Executive Board of the Central Bank, and he believes that digital tokens are not a danger to the financial stability of a country. He also explained that a problem arises only when the token is not appropriately used, such as if there are no international standards while making transactions with such tokens.

According to crypto media, Spanish Law Enforcement Units have expressed fear regarding this matter. There are gaps in the European Union’s Anti -Money Laundering (AML) regulations when it comes to cryptocurrency ATMs. Nevertheless, Balz seems to be impressed with the technological advances taking place nowadays, and he has high hopes for the Distributed Ledger Technology (DLT), Artificial Intelligence (AI), and Cloud computing.

He admits that the reputation and circulation of cryptocurrency are growing, but all possible security checks must be made at the same time.

The introduction and adoption of digital assets should not be considered as the evolution of currency, rather a way to make it feasible for the citizens to access their financial assets more conveniently. It is the start of a digital era that will change the economic sector. According to Benoit Coeure, a French economist, Facebook’s new token, Libra is going to create an impression in the community that nobody will be able to deny.

The German government is investigating possible threats around crypto exchanges

Earlier in June this year, the German government cleared its views on cryptocurrency through a statement. The government published it as an answer to a request for information by the centrist political party FDP. A report of the European Securities and Markets Authority prompted FDP to request such information. The report had a recommendation for common pan-European crypto regulations.

The government stated that the German financial supervisory authority BaFin has no knowledge of any market manipulation, hacks, or fraud on crypto exchanges in the country. The authority also has no information regarding any fraud events occurring in Germany. This made the German government believe that the crypto markets are not as unsafe as frequently said.

Although there have been some significant crypto hacks in the recent past in different countries, the general impression that digital assets are less safe than fiat currencies is not probably right. The suspicion around illegal activities like money laundering, terrorism, and drug trafficking is mainly related to Bitcoin, and German federal agencies are currently investigating the issue.

The federal police and the Financial Intelligence Unit are exploring the role of cryptocurrency within criminal circles. By the end of this year, a final report will be prepared, which will direct further actions. But financial experts are not expecting any significant change in the legal framework because the use of crypto in the criminal network is negligible till date.

The government will support pan-European crypto regulations

There is no legal definition of “crypto-asset” right now in Germany, and digital assets are not classified as securities here. As a result, cryptocurrencies are not regulated in the country. But the government is not interested in creating regulation for cryptocurrencies on an urgent basis because national laws need regulators to distinguish projects that need BaFin approval from those that do not.

Instead, the government emphasized pan-European and international regulations in the long-term with consumer safety being the primary concern. Although there is no hot news from the statement, it clarified some of the government views on digital assets. On the other hand, there is pressure from the crypto traders to finalize a strategy for blockchain as early as possible. All we can expect now is a step forward, if not a giant leap.