Löger aims to create legal framework for trade in cryptocurrencies

Austrian Finance Minister Hartwig Löger is in Lisbon for working discussions with his Portuguese counterpart and Mario Centeno, president of the Eurogroup. On the agenda for discussion are the deepening of Economic and Monetary Union and completion of the banking union, as well as the common backstop in banking resolution, the digital office and reform of the European Stability Mechanism (ESM). In addition, the two Finance Ministers are also discussing regulation of trade in cryptocurrencies in view of the fact that, on 26 February, the European Commission is holding a meeting on the subject, and at the beginning of March, aims for its part to present an action plan. Furthermore, Löger is now also putting forward national measures in order to create a meaningful legal framework in Austria.

"Cryptocurrencies are going to hugely impair the reputation of the financial market and endanger the reputation of a very important sector which, while still young, is very important for the financial market of the future. We need more confidence and more security," declares Löger. Regulation should be structured in a balanced fashion so that growth and future opportunities are not undermined.

"In the battle against money laundering and the risk of terrorism financing, the significance of cryptocurrencies is growing considerably. This alone provides an important reason for us to support change," added Löger. In particular, financial intelligence units (in the case of Austria, the Financial Investigation Unit at the Austrian Federal Criminal Intelligence Service) are to be enabled to identify the holders of virtual currency.

Löger wishes in future to treat cryptocurrencies in a similar manner to the trade in gold and derivatives. This means: establishing identity at the beginning of a business relationship, a reporting requirement to the Financial Investigation Unit for transactions in a sum over EUR 10,000, placing trading platforms under the supervision of the Austrian Financial Market Authority, and monitoring distribution models.

Löger also wishes to create a legal framework in the context of corporate financing through the issue of cryptocurrencies (initial coin offerings). Here, he proposes a digital prospectus law, to be subject to approval by the regulatory authority. Minister Löger also aims to adopt a rigorous stance against abuse. Thus, in this market too, insider trading, market manipulation and front running are to be subject to penalties.

"The challenge consists in regulating this very new market in a carefully considered manner and not adopting any excessive or indeed misplaced measures. For this reason, we are setting up a FinTech Regulatory Council, where experts in the fields of legal theory and practice are to jointly develop meaningful approaches to regulation. It will be equally important to support the European initiatives and harmonize them with national measures, so that we obtain the best for consumers," added Löger, who aims in this regard to intensify dialogue between European and Austrian legislators, ministries, regulators and research bodies. The Council is set to begin work before the end of March. "Numerous experts, regulatory authorities throughout Europe, and above all financial market experts in Austria from the Oesterreichische Nationalbank, the Financial Market Authority and the world of business have issued multiple warnings and demanded regulation," explains Löger, who has also met with a positive response from many FinTech and consumer protection organizations.