European Parliament accepts cryptocurrencies as alternative to money
A new analysis from the European Parliament Committee on Economic and Monetary Affairs accepts that cryptocurrency can be used as an alternative to fiat currency in a variety of different applications.
Its recently-issued report, entitled “Competition Issues in the Area of Financial Technology (FinTech),” expands upon concepts in earlier reports defining how crypto works and its potential impact on the global economy.
The latest report focuses primarily on the conflicts and competition catalysed by the rapid innovation of the financial technology sector.
It notes that a growing number of digitally active consumers using fintech platforms such as digital banking, digital transfers and forex, and cryptocurrencies now stands at 33%, with the UK and Spain leading the way in fintech adoption.
The EU report identifies cryptocurrencies such as bitcoin as a hugely disruptive and innovative application of blockchain technology and notes a range of industries in which start-ups can offer more cost-effective services when compared to traditional finance sector organisations.
The report focuses on the implications of blockchain technology, noting that the permissionless nature of distributed ledger technology (DLT) permits anybody to participate in the blockchain ecosystem and its attendant use cases, such as banking, without regulatory oversight.
An analysis of potential competition arising between the developing cryptocurrency sector and incumbent financial market identifies the potential inability of traditional financial institutions to combat the nascent crypto market. This could mean that central bank adoption of digital currency technology becomes necessary in order to establish potential competition issues.
The report concludes that cryptocurrencies pose strong competition to incumbent financial services, with blockchain platforms offering more efficient, lower-cost alternatives to traditional models.