EU Finance Ministers Vouch Against Libra – Style Digital Currencies Without Rules
Is regulation necessary for digital stable coins? What is the opinion of the EU? There is more to it than you expect.
The Stand Of EU Officials On Cryptocurrencies Of The Type Of Stable Coins
Banning the launch in the region of so-called cryptocurrency as global stable coins such as Facebook’s planned Libra digital currency until they have a common approach to regulation that can mitigate the risks posed by technology the European Union finance ministers have taken a bold step forward.
The European council and commission write in a joint statement that no global stable coin arrangement begins operation in the European Union until legal, regulatory and oversight challenges and risks have adequately identified and addressed.
The statement continues the recognition of the benefits of crypto technology like the cheaper and faster payments across borders, saying that they pose multifaceted challenges and risks related, as an example, to the likes of consumer protection, of privacy, taxation, cybersecurity and also operational resilience, against money laundering, terrorism financing, market integrity governance and as well as legal certainty.
What Is The Potential Of Stable coins?
“With the potential to reach a global scale, when a stable coin initiative concerns are likely to be amplified with new potential risks to monetary sovereignty, monetary policy, safety and efficiency of payment systems, financial stability and fair competition that can arise”, they added to the statement.
As it is left open ensure effective regulation, with all options per the statement that ministers and commissioners state that it should include any measures to prevent the creation of unmanageable risks by some of the global stable coins.
As per Reuters, the new European Commission is already working on a regulation for cryptocurrency like the global stable coins.
Commission VP Valdis Dombrovskis at a press conference said, “ in a joint statement with the commission, Ecofin endorsed on stable coins. They belong to a much broader universe of crypto assets. As it comes to properly address the risks, the innovation around crypto assets also comes with the potential that plays a positive role for investors, consumers and also the efficiency of the financial system.
“Many countries including the likes of the Member States like France, Germany or Malta introduces the national crypto-asset laws, which most people agree with and the advice of European Supervisory Authorities takes markets to go beyond borders and as we need a common European framework.”
“Before the end of the year, the move to implement the advice and launch a public consultation will be undertaken shortly.”
As it looks like a tacit reference to face book’s Libra Project, the joint statement hits out at lack of legal clarity around some of the major global projects in this area though no named entities were included in the text.
“Providing insufficient information on how precisely they intend to manage risks, and operate their business, some recent projects of global dimension are lacking. It is very difficult to reach a definitive conclusion as to whether and how the existing EU regulatory framework applies, due to lack of adequate information. It is mandatory to provide full and adequate information urgently allowing for a proper assessment against applicable existing rules, or entities that intend to issue stable coins or carry out other activities involving stable coins in the EU”, they warn.
Taking fright at the regulatory backlash, the speedy departure of key founder members from the vehicle set up to steer initiative, giants like Visa, Stripe, and eBay has dealt a major blow to Facebook’s Libra project. Though it cannot be gathered by just reading the Libra Association PR.
To amp up pressure on traditional payment providers to innovate and improve their offerings or consumers, is one unintended effect of Facebook’s grand design on disrupting global financial systems.
Concluding Thoughts On Stable Coins
According to the EU ministers, it is said: “ the emergence of stable coin initiatives highlight importance of continuous improvements to those payment arrangements as it meets market as well as consumer expectations that go for a convenient, fast, efficient and inexpensive way for payments especially those which are cross border”.
“Having already made significant progress, European payment systems have already made significant progress, just as European payment actors who include payment services providers who have a key role to play in this respect,” they continue. “ The ECB, as well as other central banks and national competent authorities, are set to explore further the ongoing digital transformation of the payment system, in particular, the consequences of initiatives such as cryptocurrency of the like of stable coins. In cooperation with other relevant authorities, the central banks are welcomed to assess the costs and benefits of the central bank digital currencies and together with it also engage with European payment actors while regarding the role of a private sector meeting expectations that come for efficient, fast and inexpensive cross border payments.” These are the decisions regarding the stable coins taken up by the European Union officials who stand for a regulated and more reliable coin.