A cautionary warning has been issued by the European Union regarding the future of digital currencies, stating that cryptocurrencies could be completely shut down by central banks across the world.
In a report titled “Competition Issues in the Area of Financial Technology” on a research conducted by the European Parliament and commissioned by the European Parliament Committee on Economic and Monetary Affairs, the conclusion reached was that if central banks around the world started to issue their own personalized cryptocurrencies in order to compete, it could mark the beginning of the decline of decentralised digital currencies like Bitcoin and Ethereum.
As the authors pointed out:
“The arrival of permissioned cryptocurrencies promoted by banks, even by central banks, will reshape the current competition level in the cryptocurrency market, broadening the number of competitors.”
However, the authors also maintained that, through the use of pre-emptive acquisitions or exploitative pricing policies, the market dominance of banks offering traditional services could definitely be made use of in order to censure competition in the crypto-market.
Not only does the report analyse digital currencies, but it also closely examines what the ultimate future of personal wealth, wealth management, insurance, banking, and forex would look like.
According to the research, even Bitcoin could potentially be at risk because of almost no competition in the mining industry, where over 79% is overseen by a mere five mining pools.
The report also pointed out that the global nature of such markets could indeed pose a challenge to the competition policies maintained by the EU. The authors explained that since many of the parties involved operate from overseas outside of European jurisdiction, the detection and further legal prosecution of such “anticompetitive behaviours“ become increasingly harder.
“Europe leads, at international level, the supply of wallet and exchange services, with 42% and 37% in terms of number of players. It is also the principal actor in payments (33%). Nevertheless, the main weakness of Europe is the concentration of the mining activity on non-European countries (Europe only captures just 13% of the current mining market),” the research also explained.
The EU’s caution has come in spite of the value gains Bitcoin has seen this year. Bitcoin Cash has been faring pretty well, more than several other alt-coins.
Also, in terms of innovation in the crypto-industry, Europe already seems to be leading. The first cryptocurrency ATMs were installed in Bulgaria recently, whereas the first ever Bitcoin City found its home in Slovenia.