Germany, France call for cryptocurrency scrutiny while small European banks seize opportunities

A letter sent to Argentina’s finance minister urging that cryptocurrencies get put on the G20 agenda has been making the rounds. Sent by heads of the German and French central banks and finance ministries, the letter stated that:

“The significant rise and the volatility in the valuation and market capitalization over the past year of digital instruments issued through a distributed ledger technology, referred to as “crypto-assets” or “tokens”, warrants in our view a discussion by the G20 on their nature and the issues they raise.

“This discussion could lead, if appropriate, to international harmonized actions, reflecting the transboundary implications of these tokens. We believe that there may be new opportunities arising from the tokens and the technologies behind them. They constitute a new, innovative and fast-evolving tool. However, tokens could pose substantial risks for investors and can be vulnerable to financial crime without appropriate measures. In the longer run, potential risks in the field of financial stability may emerge as well.”

The signatories identified four types of challenges to be addressed from the “onset”: building a common understanding on the nature of tokens; monitoring the implications of increasing exposures of market participants to tokens in terms of financial stability and market integrity; offering a better protection to non-professional investors; and adopting a common approach in the field of anti-money laundering and counterterrorism financing.

Meanwhile, the FT reported that smaller European banks have broken ranks and giving investors access to cryptocurrencies and advising on initial coin offerings. Vontobel and Falcon Bank, the Swiss private banks, are among the lenders that are agreeing to handle cryptocurrency-based investments on behalf of their clients. Germany’s Fidor Bank and Liechtenstein’s Bank Frick are also providing such services.

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