Bank of Greece Breaks Silence on Bitcoin

The Bank of Greece issued a brief statement on 11th February warning citizens of the potential risks associated with virtual currencies, such as bitcoin.

In particular, the bank cautioned that investors should be mindful that losses related to changes in the price of virtual currencies are not protected.

A recently released report from the Law Library of Congress, the research arm of the US Congress, suggests that this is the first time the Bank of Greece has issued a statement on virtual currencies.

Citing past statements from the European Banking Authority, the release included introductory information meant to guide consumer decision-making, as well as material that further informed readers of the potential tax implications and legal consequences associated with the use of virtual currency.

The announcement comes after a string of similar remarks from other European central banks, such as the Central Bank of Lithuania and the Central Bank of Cyprus, which both issued statements to raise awareness of the potential risks of virtual currencies in the last week.

The Bank of Greece did respond to requests for comment, but declined to elaborate on the timing of the release.

Initial reactions

Greek bitcoin users have suggested that bitcoin has yet to garner mainstream media attention in the country, and that awareness remains low as a result – although some businesses in major metropolitan areas are beginning to accept payments in BTC. Therefore, they say, the bank’s statement is unlikely to have much of an impact on the Mediterranean nation’s fledgling virtual currency ecosystem, but it could influence those who have yet to become involved.

Computer scientist and bitcoin enthusiast George Zervos described the current state of the ecosystem to CoinDesk:

“I can assure you that most people [have] heard about bitcoin, but [they] don't exactly know what it is or how to explain it to someone if asked.”

Zervos went on to suggest that Greece’s ongoing problems with tax evasion have likely stoked fears in its banking community that more wealth could “flow out of the country into bitcoin exchanges [in order to] to avoid tax”.

Potential impact

Problems with the Greek banking system in 2013 were initially cited as one of the driving factors of bitcoin's surge in value, along with similar issues in Cyprus, Italy and Spain.

At the time, Greece was in the midst of imposing severe austerity measures in an attempt to fight its escalating debt-to-GDP ratio, and members of the bitcoin community, such as Charlie Shrem publicly discussed how bitcoin’s advantages could prove attractive to the market.

When asked, members of Greece’s bitcoin community seemed convinced that the bank’s statement will not affect current bitcoin users.

Zervos concluded:

“We all know that banks are fighting bitcoin in one way or another. Personally I think not much has changed since this warning.”

Bitcoin developer and miner Yorgos Ntovas agreed Greek bitcoin users will be indifferent to the statement.

“I do not think that the Bank of Greece has any impact in Greece’s bitcoin ecosystem. The Bank of Greece has a bad reputation in Greece, and for that, users do not pay any attention at all,” he said.

Bank of Greece image via Shutterstock