Do Europeans Like Virtual Cryptocurrencies?
Bitcoin, the world’s most prominent virtual cryptocurrency has surged throughout 2017. Many analysts are seeing this as a long-term positive sign for Bitcoin and other cryptocurrencies, with numerous other indicators suggesting that mass adoption could be around the corner.
Europe is at the forefront of cryptocurrency adoption rates and many of the positive indicators. According to Bitcoin.com, six of the world’s ten most Bitcoin-friendly and forward thinking countries are in Europe.
Ashok Vaswani, Barclay’s CEO for personal and corporate banking is reportedly in talks with UK financial regulators – the FCA – about the regulated adoption of digital currencies. One of the most prominent – alongside Bitcoin – is Ethereum, a blockchain technology at the centre of numerous banks efforts to integrate cryptocurrency features into legacy payment systems.
Vaswani told CNBC at a conference that, “Obviously [it’s] a new area, obviously an area we’ve got to be careful with. We are working our way through it.”
Positive Signs Across Europe – Virtual Cryptocurrencies
A similar thought process is taking place in central banks, across Europe and China. In Denmark, the Danish central bank is considering “a digital-only e-krone”, according to media reports: although it is unclear how much this would be based on Ethereum, or whether it would incorporate simpler, SMS-style technology, similar to e-wallets.
In June 2017, the International Monetary Fund (IMF) sent a staff note, indicating they’re taking cryptocurrency more seriously: “Rapid advances in digital technology are transforming the financial services landscape, creating opportunities and challenges for consumers, service providers and regulators alike.”
IBM also announced they are working more closely with the Digital Trade Chain Consortium, a group of seven major European/global banks – Deutsche Bank, HSBC, KBC, Natixis, Rabobank, Societe Generale and Unicredit – to build a blockchain-based cryptocurrency platform.
Ethereum technology underpins this model. The new platform is designed to “streamline processes and make them more efficient and cheaper” for small and medium companies to initiate international transfers. Not only will this improve processes and lower prices for business customers; now this gives banks a meaningful way to compete with international transfer FinTech challengers, such as TransferWise.
Investor Funds and Easier Consumer Transfers
Hargreaves Lansdown, the UK’s largest online trading platform – with £70 billion of assets under management – now offers Bitcoin investments, through a Swedish company, XBT Provider. XBT buys “synthetic” certificates in US dollars, which track the value of Bitcoin through an “exchange-traded note” (ETN) listed on the stock market.
Although high risk – exposure to two currencies and exchange rates contributes to the risk factor – investors are interested. Danny Cox, speaking for Hargreaves said: “We are making it available to self-select investors in the same way we offer access to around 3,000 other exchange-traded funds, notes and commodities.”
Numerous other investment and mainstream banks and trading platforms give access to Bitcoin and various cryptocurrencies through numerous other funds. They are treated in much the same way as high-risk shares, commodities and emerging market funds.
On 1 July 2016, European regulators granted Bitstamp – a Bitcoin exchange – a license to trade within the EU. Earlier this year, Coinbase has made it easier for European consumers to transfer money in and out of their Coinbase wallets, benefiting from new European SEPA transfer regulations.
A Note of Caution
All of this is positive, of course. Bitcoin has surged in price since 2016, and numerous indicators are showing that banks and regulators are taking cryptocurrency more seriously. In a few years, consumers could start adopting cryptocurrencies alongside Apple Pay and other e-wallet solutions.
But a note of caution is needed. We have seen similar surges in the past, although not with this high-level regulatory interest and amount of financial sector support and investment. Peter Denious, Head of Global Venture Capital at Aberdeen Asset Management – with around £312bn assets under management – told Bloomberg that “Prices right now aren’t being driven by network usage, they’re being driven by speculation that tokens are going to appreciate. It’s a gold-rush mentality.”
Caution is still necessary, but should these positive indicators continue – irrespective of daily price changes – cryptocurrency could become a mainstream financial solution and service, with more security than most.
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