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Hungary Central Bank Tells EU to Ban Crypto Trading, Mining Like China

The Central Bank of Hungary governor has added his voice to calls for the European Union to follow in China’s steps and ban crypto trading and mining across its 27 member states. György Matolcsy says he supports a senior EU financial regulator’s call for the EU to ban the proof of work (PoW) mining method used to produce most new Bitcoin.

In his short statement published on the central bank’s website, Matolcsy referenced China’s declaration of all crypto-related activities as illegal last September and says he agrees with the subsequent proposal by Russia’s central bank for a ban on crypto trading and mining 

Last November, the deputy chief of the European Securities and Markets Authority, Erik Thedéen, called for the regional bloc to consider imposing an EU-level ban on the energy-intensive PoW. He pointed out that there are other methods with reduced energy of up to 99.95% without their functionality being affected. As at this point, PoW is very crucial to the existence of top cryptocurrencies like Bitcoin and Ethereum. It serves several purposes including being the algorithm that secures these cryptocurrencies, it makes them function online without being controlled by a centralized organisation, and it makes doubling digital money difficult. 

Like the climate change target set by China in 2020 which was reportedly threatened by Bitcoin that made the ruling CCP declare a ban, Thedéen cited a similar reason for his call for the energy-intensive mining of crypto assets to be prohibited. He said the suggested ban is “to maximize our chances of meeting the Paris Agreement.” He urged the EU to consider the ban while his country, Sweden, introduce measures that will stop the continued establishment of crypto mining production using the PoW method.

Afterwards came the January proposal by Russia central bank to ban similar activities and Iran’s restriction of Bitcoin mining operations for a second time in 2022 over concerns of blackouts forcing licensed miners to shut down until March.

“It is clear-cut that cryptocurrencies could service illegal activities and tend to build up financial pyramids,” Governor Matolcsy states. “Russia’s central bank is right saying that “the breakneck growth and market value of cryptocurrencies is defined primarily by speculative demand for future growth, which creates bubbles”.

He adds that the EU should “act together in order to preempt the building up of new financial pyramids and financial bubbles. EU citizens and companies would be allowed to own cryptocurrencies abroad and regulators will track their holdings.” 

In Russia’s paper, its central bank says the proposed prohibition is to prevent threats to its financial stability, citizens’ well being and its monetary policy sovereignty. It adds that the absence of a single global approach to cryptocurrency regulation, their transactions in many countries being ‘in the ‘grey’ area’ and the trend towards regulation tightening like it was the case in China stand out as some of the factors that necessitated the proposal.

So far, no other country or region has banned both crypto mining and trading except for China.

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