European Central Bank: Regulating Bitcoin "Not Within Our Powers"

The European Central Bank has no powers to regulate Bitcoin or prohibit digital currencies, said the central bank's president Mario Draghi.

The European Central Bank has no powers to regulate or prohibit Bitcoin or other digital currencies, said the bank's President Mario Draghi in a speech to the Committee on Economic and Monetary Affairs of the European Parliament.

“Certainly it’s not within our powers to prohibit or something similar or to regulate” bitcoin, he said, but we have not discussed any position institutional on the matter," said Draghi.

The European Central Bank can closely monitor and regulate the money supply within the Eurozone, but there are no tools to control the issuance and usage of digital currency. In the past, the European central bank has tested blockchain technologies for financial services, but has concluded the current state of the blockchain tools are not adequate for a smooth running of a financial system. 

The comments on Bitcoin and digital currencies came after side questioning and were not included in the official speech of Draghi to the European Parliament. But still, all eyes are on central banks as they figure out how to include another means of payment into the economy. 

Europe already has rather strict regulations and the few existing cryptocurrency exchanges and brokers are compliant with the European Union's financial regulations. Anti-money-laundering and know-your-customer restrictions apply, and present some obstacles to buyers and sellers of cryptocurrencies. But in general, the Eurozone and the Euro Area ease the adoption of cryptocurrencies, paradoxically due to the common fiat currency, the Euro.

Recently, the US Securities and Exchange Commission announced the building of a specialized cyber task force to monitor potential fraud surrounding blockchain technologies. But the SEC is attacking the behavior of companies that issue tokens resembling stocks. Otherwise, there is no regulation on the technology itself, although there have been rumors that mining may be banned or restricted in some form. But so far, the rumors that China or Russia would restrict mining have not been proven.

ECB's President has spoken on cryptocurrencies before. He prevented Estonia from issuing a national token, Estcoin. Draghi said the currency of Estonia is the Euro, as the country belongs to the Eurozone. But there is in fact no nationality to cryptocurrencies, and if Estcoin ever appeared, it would still be distributed worldwide, without borders.