As bitcoin and other cryptocurrencies gain momentum across the globe, Europe has been working to become a financial hub for firms working with digital currencies. However, in order to create a safe environment in which consumers feel confident using cryptocurrencies and firms are protected from prosecution, more regulation is necessary.

While many bitcoin enthusiasts say that government regulation takes away from the decentralized nature of cryptocurrencies, others believe that by working together with regulators, the new rules will promote adoption without stifling innovation.

Working Together Is Key

The European Banking Federation, the body that represents the continent's largest banking institutions, released its own vision for cryptocurrency regulations, which calls for digital currency firms and government regulators to work together to create a set of adaptable rules that can grow alongside the industry. The EBF said that the region's existing anti-money laundering rules could be used as the framework for the new laws, but cautioned that rules governing cryptocurrency will need constant evaluation and updating as the industry grows and changes.

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A Need For Blockchain

This year several big name financial institutions have come forward with new projects examining blockchain and its application in the traditional finance space. The ledger-like technology could revamp everything from cross border payments to contract agreements, something the EBF also acknowledged in its report. The Federation noted that more and more banks were viewing blockchain as an opportunity, and that such developments were important to encourage.