The European Parliament Committee recently declared that cryptocurrencies can be used as another form or substitute to money. This statement was given in response to the long, detailed review of how cryptocurrencies function and their influence on a global scale.
The review started with the EU Parliament Committee describing cryptocurrencies as:
“A digital representation of value, not issued by a central bank, credit institution or e-money institution, which in some circumstances can be used as an alternative to money.”
The committee further adds that:
“Their value is determined by the law of supply and demand, relying on potential exchanges for other goods or sovereign currencies, and it is not backed by any monetary authority.”
A detailed investigation on the matter reveals that the committee has accepted that cryptocurrencies can be at times problematic but are also creative. The European Union no longer sees cryptocurrencies as a threat but a future form of a monetary system.
The EU parliament committee adds to this by saying:
“All these disruptive and innovative applications utilize new and emerging technologies, among which those stand out are AI, cloud computing, biometrics, digital identity, the blockchain, cybersecurity, RegTech, internet of things (IoT), augmented reality, etc.”
The report also read that the committee arrived at the conclusion that central banks can issue their own cryptocurrencies and that they will change the existing scenario of competition that exists in the market by proposing a direct public participation using the central bank’s digital currency.
Although the European Union has accepted cryptocurrencies as another means of monetary exchange, they still face a few challenges when it comes to regulating them. It has been observed by the committee that a majority of crypto-players operate from the foreign soil which is outside the jurisdiction of the European Parliament. This makes it difficult to prosecute unethical or illegal business activities.
The real weakness, however, is the focused mining that occurs in non-European countries as it was seen that only 13% of the total mining activity happens in Europe. Mining is considered to be the most sophisticated and technology-driven activity in the cryptocurrency market and presently one of the biggest sources for mining are located in Chinese provinces.
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