The European Banking Authority (EBA) on Friday published an Opinion addressed to the European Union (EU) Council, European Commission and European Parliament, which set out the requirements for regulating "virtual currencies."

The EBA concluded that risks outweighed the benefits of virtual currencies, following a thorough assessment of virtual currencies carried out jointly with other European authorities, such as the European Central Bank (ECB) and the European Securities and Markets Authority (ESMA).

In particular, the EBA identified more than 70 risks across several categories, including risks for users, market participants, risks related to financial integrity, such as money laundering and other financial crimes, and risks for existing payments in conventional currencies.

Based on this assessment, the EBA believed that a regulatory approach to address these risks would require a substantial body of regulation.

Particularly, a regulatory approach would need to cover governance requirements for several market participants, the segregation of client accounts, capital requirements and the creation of "scheme governing authorities" accountable for the integrity of a particular virtual currency scheme and its key components.

The Opinion was mainly aimed at bitcoin, a type of virtual currency in which transactions can be performed without the need for a central bank.

The Opinion was also addressed to national supervisory authorities and advises to discourage financial institutions from buying, holding or selling virtual currencies while no regulatory regime was in place.