France and Germany join calls for global bitcoin clampdown

France and Germany’s finance ministers and most senior central bankers have joined the chorus of politicians and regulators calling for a coordinated clampdown on bitcoin and other virtual currencies.

In a letter to fellow G20 finance ministers, France and Germany said digital tokens “could pose substantial risks for investors” and potentially longer-term financial stability.

The letter was signed by French finance minister Bruno le Maire and his interim German counterpart Peter Altmaier, along with François Villeroy de Galhau and Jens Weidmann, the heads of the Banque de France and Bundesbank respectively.

Their intervention comes in the wake of increasingly vocal interventions this week from regulators and watchdogs including the Bank for International Settlements, European Central Bank and Hong Kong’s Securities and Futures Commission.

ECB boardmember Yves Mersch’s said on Thursday that “cryptocurrencies” are “not money, nor will they be for the foreseeable future”, a sentiment echoed by the eurozone’s two largest economies. Their letter noted that the instruments “are currently largely mislabeled as ‘currencies’ in the media and on the internet”, and said a “lack of clarity” about the nature of tokens “can only fuel speculation”.

The ministers also agreed with Mr Mersch that cryptocurrencies currently have “limited” implications for global financial stability, but said “given the fast increase in the capitalisation of tokens and the emergence of new financial instruments” based on them, “these developments should be closely monitored”.

They called for greater protections for retail investors speculating in crypto, saying “the buildup of individual exposures to such volatile tokens could have damaging consequences for misinformed investors who do not understand the risks they are exposing themselves to”.

They added: Great efforts have been made in recent years to protect retail investors and consumers more generally, and there is no reason that appropriate frameworks should not be applicable in this sector.

The letter added that both countries are “keen to pursue” opportunities relating to the underlying blockchain technology, but said there should be a “clear distinction” between its use for cryptocurrency and other potentially useful technologies.

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