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EU Report Says Cryptocurrencies 'Unlikely' to Challenge Central Banks

Cryptocurrencies will not challenge the economic power of central banks, the European Parliament said last week.

In the latest Monetary Dialogue report issued on June 26, the European Parliament’s Committee on Economic and Monetary Affairs said that while cryptocurrencies have made financial transactions “relatively safe, transparent, and fast,” they pose no threat to sovereign currencies around the world.

The analysis, which was conducted by the Center for Social and Economic Research, a non-profit research institute based in Warsaw, first recognized the positive changes cryptocurrencies have brought to financial transactions, noting that they now “are used globally, disregarding national borders.”

Cryptocurrencies “respond to real market demand,” the analysis claimed, and they will have the potential to become a “full-fledged private money” or even a permanent element to the global economy.

However, the researchers said it is “unlikely” cryptocurrencies will threaten central banks and sovereign currencies and dismantle the existing monetary structures, especially in countries where their sovereign currencies are widely circulated.

At present, according to the analysis, the total value of all cryptocurrencies circulating in the market heavily underweigh the value of major sovereign currencies in circulation.

But a few exceptions exist. The report cited runaway inflation in Venezuela and noted that in much smaller monetary jurisdictions, cryptocurrencies “may” offer alternative to unstable currency.

In addition, the analysis suggested that financial regulators should treat cryptocurrencies as “any other financial transactions or instruments,” given the potential risks associated with transactions using cryptocurrencies, including money laundering, tax evasion, and financing illicit activities.

Cryptocurrencies image via Shutterstock.

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EU Parliament Touts Blockchain to 'Empower' Businesses and Citizens

Members of the European Parliament believe small businesses could benefit from integrating blockchain technology.

The Industry, Research and Energy committee voted Wednesday to recommend that small businesses look into blockchain payment systems in a move aimed at relieving some of the costs associated with intermediary payment facilitators. In addition, an oral question will be posed to the EU Commission about the technology during a plenary session next month, according to a press release.

The committee specifically suggested non-monetary uses for the technology, specifying data controls, supply chain management, land registries and in democratizing the energy market, according to the release.

Committee member Eva Kaili, who reported on the meeting, said the technology is “cutting-edge,” adding:

“Today the Industry Committee voted univocally in favour of a forward-looking technology that we expect to change the quality of our life, empower SMEs and improve business models in most industrial sectors … and we aspire to make EU the global leader in the era of the Fourth Industrial Revolution.”

According to the release, the members have called on the EU Commission to set regulatory rules for various blockchain use cases that are “innovation-friendly and technology neutral.” They have also asked to include funding for emerging blockchain projects in the post-2020 EU long-term budget .

Speaking at CoinDesk’s Consensus 2018 conference Monday, Kaili noted that the EU was beginning to encourage blockchain adoption, saying “in the next few years we’ll have harmonization, sandboxes and regulation.” That being said, she further noted that “It’s really difficult to educate every politician on blockchain technology … And plus we don’t have too many scientists within the European Parliament.”

EU Parliament office image via Shutterstock

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Blockchain Has Potential in Curbing Odometer Fraud: EU Report

The European Parliament has released a research paper that explores blockchain, among other technologies, in the prevention of odometer tampering.

The report, issued by the Directorate General for Internal Policies, investigates the possible role of blockchain technology in the use case, concluding that it might “present interesting potentials” for effective prevention of fraud through increased transparency and data privacy.

The report explains:

“The blockchain technology currently proposed by the car engineering and electronics industry would allow downloading mileage and GPS data from vehicles, and securing it on a ‘digital logbook’.”

The study further suggests that blockchain can be supported by a “connected cars” concept that allows cloud-based access to all relevant vehicle data in a future scenario involving autonomous vehicles.

Blockchain technology is one among the three approaches identified to address odometer fraud in the paper, including a standardized framework based on international standards (ISO) and equipping a vehicle with hardware security modules (HSMs) to protect data.

The issue of odometer fraud, or “clocking,” is one being investigated by other startups in the blockchain space, as well as major enterprises.

In June, CoinDesk reported on a project by startup BigchainDB and German energy company Innogy that aims to create a digital identity on a blockchain of any physical good, including autos.

To tackle clocking, the CarPass project creates a record of the odometer and vehicle activity with the data visible and verifiable on a digital platform.

“If someone starts tampering with the mileage, you basically see it as a step change in the data that someone tampered with [it],” said Innogy’s Carsten Stocker at the time.

Car odometer image via Shutterstock

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