The European Parliament, the legislative branch of the European Union, has approved a proposal for a task force dedicated to digital currencies and Blockchain technology.

The proposal, set out in a resolution drafted by Jakob von Weizsäcker (S&D, DE) suggests that the task force, which would be overseen by the Commission, should build expertise in the underlying technology of virtual currencies. It would also be tasked with recommending any necessary legislation, but the text warns against taking a heavy-handed approach to this new technology which, it says, can offer significant opportunities for the consumer and economic development.

“To avoid stifling innovation, we favour precautionary monitoring rather than pre-emptive regulation. But IT innovations can spread very rapidly and become systemic. That’s why we call on the Commission to establish a taskforce to actively monitor how the technology evolves and to make timely proposals for specific regulation if, and when, the need arises”, said Mr von Weizsäcker. The applications of distributed ledger technology, the technology underlying Bitcoin, are not yet taking place on a systemic scale and are still evolving rapidly. At this stage, we shouldn’t stifle innovation with pre-emptive regulation. But given the very rapid evolution in this field, we cannot afford to sit back and wait. Instead, we should establish a task force at the EU level to engage in active and close precautionary monitoring of how applications are evolving so that we are in a position to act swiftly and forcefully if need be before applications are becoming systemic. Also, existing legislation already needs to applied, for example in the area of anti-money laundering.

The Commission is currently considering proposals to bring virtual currency exchange platforms within the scope of the existing EU Anti-Money Laundering Directive, which is due for an update. These proposals include a measure which would require the platforms to undertake due diligence when customers exchange virtual currencies for real ones. This would end the anonymity associated with such exchanges. Regulators worry that the current system is helping money laundering and terrorist organisations.

Parliament’s proposal, which was passed by 542 votes to 51, with 11 abstentions, will now be sent to the European Commission for consideration.