on the crypto
Several European countries have come together in the search for regulations that could have a major impact on stablecoins and asset-backed cryptocurrencies in the EU.
Stablecoin banned until legislation is approved
According to the Reuters report, Germany, France, Italy, Spain and the Netherlands have asked the European Commission to work out strict regulation for asset-backed cryptocurrencies such as stablecoins, in order to protect consumers and preserve state sovereignty in politics. monetary.
Finance ministers of the five EU member states said in a joint statement that stablecoin operations should be banned in the 27 member state bloc until legal, regulatory and supervisory challenges have been addressed.
In addition, the assembly stressed that private stablecoin providers will have to adhere to European regulation and will not be allowed to operate in the EU if they fall below a certain standard.
While not mentioned explicitly, ministers may have been referring to the Facebook-backed Libra currency (NASDAQ shares: FB). Both the French and German governments have already said they are opposed to private companies launching currencies that could challenge the euro.
The European Commission is expected to present its regulatory proposals this month
"We all agree that it is our job to keep the financial market stable and ensure that what is a task for states remains a task for states," German finance minister Olaf Scholz told reporters during a joint statement with its counterparts.
Stablecoins are a type of cryptocurrency backed by traditional assets. They got on the agenda of politicians last year when Facebook released plans for its Libra currency.
Central banks and financial regulators of all countries have voiced concerns about how Libra could destabilize monetary policy, facilitate money laundering and evade privacy regulations.
Since then, the Libra Association has redesigned the project and changed its white paper to suit regulators. The European Commission is expected to present its regulatory proposals at the end of this month.
European countries require stablecoins to have a 1: 1 ratio to fiat currency
The five countries want all stablecoins to be tied 1: 1 to fiat currency, with a reserve of assets set up in euros or other currencies of EU member states and deposited in an EU approved institution.
All entities operating as part of the scheme behind a stablecoin should be registered in the EU, they said. Such regulations would likely also impact the Geneva-based Libra Association, which plans to issue and govern its Libra stablecoin.
French Finance Minister Bruno Le Maire said he is waiting for the Commission to issue very strong and very clear rules to avoid the misuse of digital currencies for terrorist activities or money laundering.
