ECB's Nowotny Toughens Bitcoin Stance, Backs China's Crackdown

(Bloomberg) -- European Central Bank Governing Council member Ewald Nowotny toughened his stance on cryptocurrencies.

The Austrian central bank governor has publicly been dismissive of bitcoin and other virtual currencies as a store of value or useful technology, but used to think that it should be up to individual investors to decide whether they want to buy them, he told the Austrian daily Oberoesterreichische Nachrichten in an interview. Now, he thinks the risk of illicit activity is too great.

“Bitcoins weren’t created transparently and publicly, and they are suitable for money laundering,” Nowotny told the newspaper. “For a long time, I had the view that investment in Bitcoin should be a private matter. But I got the feeling that a legal provision is needed.”

The European Union started to tighten laws about cryptocurrencies last year. It is trying to rein in derivatives linked to bitcoin, is cracking down on exchanges operating without permission, and targets money launderers trying to use bitcoin as a smokescreen. The bloc’s financial-services chief has urged all EU agencies to put their “heightened attention” on the issue.

Nowotny said it was “absurd” that savings associations were investigated for their compliance with money-laundering rules, while at the same time “the floodgates are open” with bitcoin.

“I like what the Chinese central bank governor has said: bitcoins aren’t a matter for monetary policy in China, but for the police,” he said.

To contact the reporter on this story: Boris Groendahl in Vienna at bgroendahl@bloomberg.net.

To contact the editors responsible for this story: Patrick Henry at phenry8@bloomberg.net, Keith Campbell, Steven Crabill

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