Dear Reader,

This book could not have been published at a better moment. Basically every day, newspapers report about bitcoin and other cryptocurrencies. Earlier this year, the Guardian labeled ‘blockchain’ – the open-source ledger behind bitcoin – as the buzzword of 2018.

Also policymakers and industry seem to be gearing up for the FinTech future. End of February 2018, the European Commission organized a roundtable in Brussels on “Cryptocurrencies – Opportunities and Risks” with key authorities, industry representatives and experts. In his speech following the roundtable, Valdis Dombrovskis, Commission Vice-President in charge of Financial Stability, Financial Services and Capital Markets Union, pointed to the opportunities of cryptocurrencies, but also – and perhaps mainly – to the substantial risks for consumers and investors associated with their use. Not only is the value of most cryptocurrencies extremely volatile, crypto-assets also present risks relating to money laundering and the financing of illicit activities, and Initial Coin Offerings expose investors to substantial risk because of the lack of transparency regarding the identity of the issuers and underlying business plans. Mr. Dombrovskis also pointed out that they “need to assess further under what circumstances cryptocurrencies and related services are covered by existing regulation”.

The need for a better understanding of the risks and opportunities that go with the use of crypto-assets, and a better understanding of the applicability of EU regulation – such as the rules on anti-money laundering and on e-money – was equally stressed in the European Commission's FinTech Action Plan that was released shortly after the roundtable, on March 8th of this year: “An assessment of the suitability of the current EU regulatory framework with regard to Initial Coin Offerings and crypto-assets more generally is necessary ”. Indeed, a fair and transparent framework that can appropriately address the associated risks seems a sine qua non in order to ensure that EU firms, investors and consumers can take advantage of the technical innovations in the financial sector, while also appropriately addressing the risks.

This book offers an important contribution to that objective. It explores the concept of virtual currencies and guides you through the maze of European financial law.