. although there is no specific evidence to confirm the suspicions, security experts are increasingly warning that vcs could offer rogue states a route to circumvent sanctions and gain access to foreign currency and world markets. the ecb takes an active role within our mandate, for example our opinion on the 5th anti - money laundering directive, which will extend the scope of obliged entities to cover exchanges and wallet - providers handling vcs, in order to avoid anonymous transfers into fiat currencies. the ecb reminded the eu legislative bodies that they should not be perceived, through regulatory forbearance, to be promoting vcs, and should take vcs ’ inherent stability risks into consideration. but we need a broader perspective on regulatory intervention for vc facilitators that extends beyond the fields of aml and ctf. possible regulatory action should be explored, as well as amending or broadening existing frameworks such as the revised payment services directive 5 / 9 bis central bankers'speeches ( psd2 ) so that the licensing and supervision rules also apply to vc facilitators. protecting financial market infrastructures third, i would like to cover financial market infrastructure services. one could envisage a major incident involving vcs triggering contagion from the market infrastructure services themselves to their participants, and even beyond. against this background, we have to review whether the regulatory and oversight tools in the field of trading, clearing and settlement require updating. one of the key questions is whether vcs could become a settlement asset in payments and settlement services or be used in the clearing domain. existing standards for fmis, for example, refer to the usage of “ a settlement asset with little or no credit and liquidity risk12 ”. while it could be argued that this by and large excludes settlement involving vcs in payment systems, it should be borne in mind that this definition currently does not systematically apply to all fmis. the situation is similar in the field of securities settlement. the question is whether vcs could be used as an asset for settling securities transactions or constitute a security per se. the answer hinges on whether they could be legally characterised as “ financial instrument / financial asset ” under the applicable regulation. certain authorities have already qualified vcs as financial instruments or commodities and this may prepare the ground for the issuance of some specific vc - related products, including derivatives. vc derivative activities need to be fully transparent and records must be collected, maintained and made available by trade repositori

users. while vcs remained an esoteric interest, it seemed sufficient for authorities to mostly observe and issue warnings here and there. but it is the dose that makes the poison. now that vcs may grow to be economically significant, we need to reduce the risk of negative impacts on the economy. in my remarks today, i wish to explain what it takes for something to be considered “ money ” – and how vcs measure up. i will then set out what i believe are some of the key regulatory questions that need addressing, and actions that need to be taken to mitigate the potential blowback from vcs to the rest of the financial system. what is money? money has formed an integral part of human economic interaction for millennia. it has appeared in many forms – metallic currency, paper notes, cowry shells, cigarettes and even the great rai stones of yap. 2 are vcs the latest incarnation of money? the answer for now, and indeed for the foreseeable future, is no. economists generally define money as being a verifiable asset that fulfils three basic functions : a medium of exchange, a unit of account and a store of value. 3 how well do vcs carry out those functions? 1 / 9 bis central bankers'speeches medium of exchange some vcs have attained patchy acceptance as a medium of exchange. the current largest, bitcoin, is accepted by some retail outlets, but on a global scale these outlets remain small in number, and hardly any actual transactions have taken place. on a daily basis, there are around 284, 000 bitcoin transactions globally, compared with 330 million retail payments in the euro area. indeed, a recent bitcoin conference stopped receiving payment in bitcoin because of the cost and time involved in processing the payments. 4 bitcoin is far inferior to existing payment options. bitcoin transactions generally require confirmation from six miners. with each block taking around ten minutes to mine, you would expect transactions to take an hour to process. but with recent network congestion, the average time for one confirmation can easily exceed several hours. at these speeds, if you bought a bunch of tulips with bitcoin they may well have wilted by the time the transaction was confirmed. 5 bitcoin payments are also expensive. the recent cost of a bitcoin transaction is €25, the same cost as carrying out 12, 500 transactions on the incoming target instant payment settlement ( tips