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EU says it will "embrace" blockchain

(Image credit: Image Credit: Zapp2Photo / Shutterstock)

The European Commission and the United Nations have clarified their position on cryptocurrencies and the blockchain technology behind them following a warning from America's financial regulator. 

The US Securities and Exchange Commission chairman Jay Clayton issued a stern warning to businesses considering adding “blockchain” to their names in an effort to capitalise on the the recent popularity of distributed ledger technology without first providing adequate disclosure to their investors on the changes and potential risk of such a move. 

Clayton highlighted the folly of such a move during his opening remarks at the Securities Regulation Institute, saying:

“I doubt anyone in this audience thinks it would be acceptable for a public company with no meaningful track record in pursuing the commercialization of distributed ledger or blockchain technology to (1) start to dabble in blockchain activities, (2) change its name to something like "Blockchain-R-Us," and (3) immediately offer securities, without providing adequate disclosure to Main Street investors about those changes and the risks involved. The SEC is looking closely at the disclosures of public companies that shift their business models to capitalize on the perceived promise of distributed ledger technology and whether the disclosures comply with the securities laws, particularly in the case of an offering.” 

European Commissioner Valdis Dombrovskis delivered a speech at around the same time in which he declared that Europe would “embrace the opportunities of blockchain” while taking the necessary measures to prevent it from becoming a “token for unlawful behaviour.” 

According to the commissioner, the EU will apply the money laundering provisions that are currently in place for traditional banks to cryptocurrencies and the exchanges used to trade them.  It will also be a requirement for customers to prove their identities to exchanges to prevent fraud and other crimes. 

Cryptocurrency and the exchanges where users trade it may have managed to bypass regulations last year but this year regulators worldwide are taking steps to rein in the booming market.   

Image Credit: Zapp2Photo / Shutterstock

Anthony Spadafora
After living and working in South Korea for seven years, Anthony now resides in Houston, Texas where he writes about a variety of technology topics for ITProPortal.