Regulation of cryptocurrencies must be considered, Bundesbank vice president Claudia Buch told Reuters, even though she does not believe they pose a threat to financial stability.
Buch said that speculation on volatile virtual tokens does not pose a systemic threat because it is not financed through credit, but she said that regulators should look at introducing rules to protect consumers, given that such speculation could prove costly for investors.
"The role of crypto tokens in money laundering and criminal activity must also be closely examined," Buch said.
"I don't see a threat for financial stability at the moment as the speculations are generally not financed with loans and the relevant markets are rather small."
The issue of how to regulate cryptocurrencies is likely to be high on the agenda at a March 19-20 meeting of Group of 20 finance leaders in Argentina.
International Monetary Fund Managing Director Christi ne Lagarde has urged governments and central banks to develop regulations for such assets to prevent them from becoming a newvehicle for money laundering and terrorist financing.
Japan has also urged its G20 partners to act on preventing cryptocurrencies from becoming a vehicle to finance criminal activities.