A recent review released by the European Parliament's Economic and Monetary Affairs Committee argues that cryptocurrencies can effectively replace existing fiat currencies.
The impressive review covered most areas, which include crypto classification, usage, regulations and the possible entry of central banks into the cryptocurrency market.
An in-depth analysis of the fintech sector revealed the EU Parliament's very nuanced position on crypto assets, with the committee stating that crypto would exist as an alternative to currencies in various applications.
In a July 2018 report, entitled “Competitive Issues in Financial Technology (FinTech),” provides insight into the future challenges posed by the ubiquity of crypto-assets.
Despite the study’s focus on managing anti-competitive behavior, key points made regarding cryptocurrency can be identified:
⁃ Cryptocurrencies can be defined as “a digital representation of value not issued by a central bank.”
⁃ Digital currencies can act as as an alternative to fiat funds.
⁃ The transition of central banks to digital currency technology is inevitable.
The EU analysis of the current situation clearly assesses the inability of traditional financial institutions to deal with the emerging crypto market. The report notes that not only the adoption, but also the transition by central banks to blockchain technologies may become inevitable to eliminate the problem of competition.
The current analysis of the situation in financial markets focuses on the replacement of fiat currencies with crypto assets. The report emphasizes that cryptoassets are a strong competitor to traditional financial models, and blockchain technology offers faster, safer, more efficient and inexpensive services in the financial sector.
Separately, the study reveals the problems of cryptocurrency mining. According to a statement by the European Parliament, Europe's main weakness is the concentration of mining activity in non-European countries (Europe has only 13% of the current crypto mining market). Mining of crypto assets, according to parliamentarians, is the most strategic, complex and technologically dependent activity in the crypto industry..
Overall, the July EU report expanded the horizons of cryptocurrencies, acknowledged the inevitability of their integration and clarified its views on the use of cryptocurrencies as a replacement for fiat money.
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