EU Won't Ban Crypto, But It May Try to Control It, According to Bitcoin Suisse's Chairman
February 01, 2023Source:COVER ART/ILLUSTRATION VIA CRYPTOSLATE
Luzius Meisser, chairman of the Swiss crypto firm, weighs in on why the bloc is likely to try to build a firewall around crypto rather than prohibit its use altogether.
Building a firewall that separates crypto from the traditional financial system may be the best approach to keep the digital asset industry alive in the European Union, Luzius Meisser, chairman of crypto firm Bitcoin Suisse, told CoinDesk TV’s “All About Bitcoin” on Monday.
Meisser said the “containment” strategy, which is one of four strategies the Zug, Switzerland-based firm has outlined, could be beneficial to crypto and the traditional finance marketplace. He said containing crypto is what EU lawmakers are on track to pursue.
“Their intention is to protect, to shield, the traditional financial system from the toxicity of the crypto economy,” Meisser said. “But maybe, it also helps protect cryptocurrencies from the traditional financial systems with all its faults and mistakes.”
Last week, EU lawmakers voted to impose strict restrictions on banks looking to hold crypto by requiring firms to hold a euro of their own capital for every euro held in crypto. The stipulations outlined reflect closely those set by the Basel Committee on Banking Supervision, the industry’s international standard setter.
Crypto banking rules proposed by the committee will become even “more extreme” towards crypto, according to Meisser, who points to the 1% to 2% rule as an example. The restrictions, set to take effect at the beginning of 2025, will limit a bank’s exposure to crypto, capping it at 2%.
“It means for every bitcoin you hold for a client, you need to have one bitcoin on top of that in equity,” Meisser said. “It basically prohibits banking with bitcoin,” he later added.
Meisser said what this means is that “you cannot have a traditional bank account where the client just has a claim in bitcoin.”
As part of the Committee's rules, it would also mean that crypto would not be recognized as collateral, Meisser said, making it more difficult for a bank to issue a client a loan in the future for example. Doing so would only give banks the runway to store crypto for their clients, he said.
Nonetheless, lawmakers are unlikely to ban crypto outright, Meisser said, because “it’s not compatible with liberal political order.”
He said it is also unlikely that lawmakers will take a laissez faire approach and let the market work itself out because it would “defeat their own purpose” and make them “obsolete.”