Harmless for now, Dangerous in the Future: Here's What EU Researchers Think of Cryptocurrencies

Whelan appears less positive about cryptocurrencies than the CASE specialists, mentioning "Bubbles associated with cryptocurrencies" and their toxic potential for financial sector of the wider economy.

Kiel report: Cryptos are failed by design, but can help central banks to establish a more stable financial system The document simply titled "Virtual Currencies" was prepared by economic researchers at the Kiel Institute for the World Economy.

At the same time, the researchers rejected the idea of cryptocurrencies as independent entities.

"Currently, cryptocurrencies such as Bitcoin could not supplant traditional currencies to any significant degree. The available technology faces severe limitations regarding scalability. In particular, it would be prohibitively expensive to conduct even a moderate share of the transactions now handled via traditional currencies through cryptocurrencies."

Bruegel report: Cryptos are harmless, but can coexist positively with central banks "Cryptocurrencies and Monetary Policy" report was presented by representatives of Bruegel, a Brussels-based think tank specializing in economics.

According to the Belgian researchers, cryptocurrencies are unable to fulfill the role of money at this point, as they are "Inherently" volatile and are "Managed in ways that are very primitive compared to what modern currencies require." They recognize that both factors might be fixed in the future, as the protocols underpinning cryptocurrencies evolve.

Cryptocurrencies could "Have a positive effect by acting as a disciplining device on central banks," or, in other words, by breaking its monopoly.

The Bruegel experts believe that "Central banks could face some risks from theemergence of cryptocurrencies as relevant mediums of exchange with stable purchasing power."

"The evidence so far suggests that cryptocurrencies are not as widely used as any officialcurrency and are not real contenders for currency substitution. The design of their protocols, at least so far, is very primitive and arbitrary relative to what the management of modern financial systems requires".

The scholars amply go over cryptocurrencies, engaging in topics such as ICO regulation in various jurisdictions and DLT technologies, before stressing "The need to define regulatory tasks clearly within the multilateral Eurosystem, the need to address VCs potential for facilitating financial crime and tax evasion, and the need to assess the scope for 'regulatory technology' in addressing the risks posed by VCs by market participants," urging the ECB to identify their role in regards to cryptocurrencies.