The European Banking Authority, which has previously warned consumers that they're unprotected if they get themselves into the crypto-currency game, has followed up with a don't-touch warning to banks.

In this announcement, issued on Friday July 4, the EBA says it's identified “more than 70 risks” that apply to users, banks, enforcement of money-laundering laws and payments in fiat currencies.

Last December, the EBA gave a specific warning to consumers that they were unprotected in the world of Bitcoin.

The authority appears to put Bitcoin regulation in the too-hard basket, at least for now, saying that “a regulatory approach to address these risks would require a substantial body of regulation”.

For market participants like banks, the EBA says, regulation would need to cover capital requirements, segregation of client accounts, and “the integrity of a particular virtual currency scheme and its key components, including its protocol and transaction ledger”.

In the absence of such a regime, it makes this blunt assessment: “As an immediate response, the EBA therefore advises national supervisory authorities to discourage credit institutions, payment institutions and e-money institutions from buying, holding, or selling virtual currencies.”

In the wake of Mt Gox, and ongoing stings in which users of various crypto-currencies have their accounts raided, the EBA also expresses concern about the lack of consumer protection. It notes that users can lose their virtual currency holdings in a variety of ways – they have their wallets hacked, they lose their wallet data in a hardware failure, or an exchange can be hacked – all without any kind of consumer protection or refund right.

Its full opinion, including its list of risks, is here.

Meanwhile in Canada ...

Europe's attitudes to Bitcoin contrast strongly with Canada's, as the land of the maple leaf has just added regulation for use of "virtual currencies" to its Proceeds of Crime (Money Laundering) and Terrorist Financing Act. The amendments mean those trading in virtual currencies face the same reporting requirements as banks, insurance companies and "money services businesses". ®