The European Union's banking watchdog on Friday cautioned financial institutions against trading or holding virtual currencies until the 28-nation bloc comes up with new rules for the sector.
MarketWatch reports that in a paper addressed to EU and national authorities, the European Banking Authority outlined the kind of issues that would need to be regulated for safer trading in virtual currencies, like bitcoin.
It cautioned lenders and other firms against buying, holding or selling these currencies while no regulation is in place.
'The EBA recommends that national supervisory authorities discourage credit institutions, payment institutions, and e-money institutions from buying, holding or selling VCs [Virtual Currencies], thereby 'shielding' regulated financial services from VCs', the paper said.
An EBA spokeswoman said it was up to EU authorities, including the EU's executive and the European Parliament, to draw up regulation for the sector.
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