The European Banking Authority (EBA) has said lenders in the EU should refrain from offering customer accounts in virtual currencies like bitcoins until regulatory safeguards are in place, Reuters has reported. Virtual currencies, which unlike conventional money are not backed by a central bank or government, have come under particular scrutiny since Tokyo-based exchange Mt Gox went bankrupt in February after losing an estimated $650m worth of customer bitcoins. The EBA proposed a new regulatory framework along with advice to banks to steer clear of virtual currencies until rules are in place. “This immediate response will ‘shield’ regulated financial services from virtual currency schemes and will mitigate those risks that arise from the interaction between virtual currency schemes and regulated financial services,” the EBA said.
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