European financial institutions should avoid dealing with virtual currencies such as bitcoin until there are proper regulations in place, the European Banking Authority warned in a document it released on July 4.

The authority did admit in the document virutal currencies have their benefits, but the risks involved far outweigh them. The EBA outlined a couple of potential benefits such as quicker and cheaper transactions for consumers as well as financial inclusion for the underbanked and unbanked population.

The EBA said it found some 70 potential risks of virutal currencies from money laundering, to exchanges being hacked, among others.

"As an immediate response, the EBA recommends that national supervisory authorities discourage credit institutions, payment 
institutions and e-money institutions from buying, holding or selling VCs," the organization wrote in the document.