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No Libra-style digital currencies without rules, say EU finance ministers

2019-12-12 19:59:51

European Union  finance ministers have agreed to a de facto ban on the launch in the region of so-called global “stablecoins” such as Facebook’s  planned Libra digital currency until the bloc has a common approach to regulation that can mitigate the risks posed by the technology.

In a joint statement, the European Council and Commission write that “no global ‘stablecoin’ arrangement should begin operation in the European Union until the legal, regulatory and oversight challenges and risks have been adequately identified and addressed.”

The statement includes recognition of potential benefits of the crypto technology, such as cheaper and faster payments across borders, but says they pose “multifaceted challenges and risks related for example to consumer protection, privacy, taxation, cyber security and operational resilience, money laundering, terrorism financing, market integrity, governance and legal certainty.”

“When a ‘stablecoin’ initiative has the potential to reach a global scale, these concerns are likely to be amplified and new potential risks to monetary sovereignty, monetary policy, the safety and efficiency of payment systems, financial stability, and fair competition can arise,” they add.

All options are being left open to ensure effective regulation, per the statement, with ministers and commissioners stating this should include “any measures to prevent the creation of unmanageable risks by certain global “stablecoins.”

The new European Commission   is already working on a regulation for global stablecoins, per Reuters.

In a speech at a press conference, Commission VP Valdis Dombrovskis, said: “Today the Ecofin endorsed a joint statement with the Commission on stablecoins. These are part of a much broader universe of crypto assets. If we properly address the risks, innovation around crypto assets has the potential to play a positive role for investors, consumers and the efficiency of our financial system.


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