Calls for regulation in the cryptocurrency space are nothing new. Regulators, governments and financial commentators regularly advocate for more control, and a greater degree of regulatory oversight at a time of ever-increasing interest in the field.
Now, some of the largest cryptocurrency brokers in Europe are joining those calls, asking for their own market to become more regulated sooner rather than later.
In particular, they are calling for tighter ‘know your customer’ requirements, which they suggest could make cryptocurrencies more amenable to institutional investors, as well as clearing up the perception of cryptocurrency as a tool for criminals and illegal activity.
The calls come from eToro Europe Ltd. and Vienna-based Bitpanda GmbH, two of the biggest operators in the European market.
In an interview Bloomberg, Bitpanda CEO Eric Demuth gave a vote of confidence in plans for greater regulation, saying he would “be happy to have regulations, so we know where we stand.”
Marc Ostwald, a global strategist at ADM Investor Services, said the calls made sense for incumbents already performing well in soon-to-be regulated markets.
“This is all about where the burden of proof lies for anti-money-laundering, so wanting regulations seems very sensible…Even if you’re making a killing in trading, someone could come up with an unexpected piece of regulation that puts a big red line through your business plan,” Ostwald told the news outlet.
The appeal comes at a time of increasing regulation for cryptocurrency around the world. The European Commission is currently examining whether European Union (EU) rules can be applied to cryptocurrency markets, while tax authorities in Spain and the United States are increasing the pressure on brokers to hand over information.
Germany’s BaFin regulator decided in March that all cryptocurrencies were ‘financial instruments’, creating a whole new raft of obligations and requirements on brokers, while regulators elsewhere have been keen to devise their own methods of regulation.
Iqbal Gandham, managing director of eToro in the UK, said there were clear benefits to bringing forward regulation as soon as possible, with cryptocurrencies now accounting for around 75% of the firm’s business.
“The benefits of regulation are clear. An appropriate framework would serve to both protect consumers, and ensure the longevity and legitimacy of the industry itself,” Gandham said, according to the news outlet.
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