Last year, the plenary of the European Parliament received a report on virtual currencies drafted by the German Social-Democrat MEP Jakob von Weizsäcker. In this interview, Von Weizsäcker contemplates the emergence of currencies such as Bitcoin, as well as the need for the European Union to set up a working group to follow developments in this field, and to prepare legislation if necessary.
Mr von Weizsäcker, your report says that virtual currencies are a quick, decentralised and cheap way to pay. Can they become a viable alternative to bank transfers?
It is an exciting technology because it allows building trust in a system lacking central authority. In the future, we can imagine that money transfers will be decentralised, with a potentially much lower cost than now. It is also imaginable that today's operators such as Swift turn to this technology to become more efficient. But the potential applications of the underlying technology go far beyond virtual currencies. This technology could be used in many areas, from the clearing and settlement of financial transactions to digital management rights and the fight against VAT fraud.
The evolution and application of this technology is still unknown. Some changes will occur quite quickly and therefore regulation may be necessary. Do you consider that the anonymity of the transactions is a threat, especially as regards money laundering?
I would not call it anonymity. One of the special aspects of this technology is that you get a record of every transaction made. With a pinch of forensic talent, it becomes easier to follow financial transactions with virtual currencies than with cash. In the matter of transparency, you are between a normal bank transfer and cash. The latter is truly anonymous.
What approach do you recommend to regulate this technology?
Applications of the technology underlying Bitcoin are not being developed on a systemic scale and are still evolving rapidly. At the present, we should not stifle innovation with preventive regulation. But given the quite rapid evolution in this field, we cannot sit idly by and wait. We should create a European-wide working group to implement active and close monitoring of the evolution of applications so that we are able to act with agility and firmness if necessary before the applications become systemic. In addition, existing legislation should be applied against, for example, money laundering.
