European Union & Stablecoins: A New Relationship

Facebook’s Libra project had quite an impact on government regulators around the world. We’re still feeling the aftershock. Case in point: A new EU draft document seeking to control and regulate how we the people (or at least those living in the EU) will use stablecoins — such as Libra.

Date: 
November 11, 2019
Read time: 
2 minutes

European Union & Stablecoins: A New Relationship

Date: 
November 11, 2019
Read time: 
2 minutes

Facebook’s Libra project had quite an impact on government regulators around the world. We’re still feeling the aftershock. Case in point: A new EU draft document seeking to control and regulate how we the people (or at least those living in the EU) will use stablecoins — such as Libra.

Facebook’s Libra project had quite an impact on government regulators around the world. We’re still feeling the aftershock. Case in point: A new EU draft document seeking to control and regulate how we the people (or at least those living in the EU) will use stablecoins — such as Libra.

At the very least, we need a robust regulatory framework to deal with virtual currencies.  (Markus Ferber, a German conservative who leads the largest EU Parliament grouping.)

Quick refresher: Libra is a proposed stablecoin being developed by several dozen titans of industry. The lead is being taken up by Facebook, which also owns messaging app giant Whatsapp. The plan is to create a stablecoin for users of Facebook, Whatsapp, and other apps. This would help with cross-border payments and myriad scenarios. It will apparently be backed by billions of dollars worth of fiat, assets, bonds, stocks...basically a cornucopia basket of financial instruments designed to hold a single value.

Why are governments spooked?

Facebook’s Libra will be open to billions of people. They will get to choose between pending money in Facebook Libra … or government fiat. Obviously governments want to keep their monopoly on money. 

So what’s this new relationship?

Well, EU lawmakers have drafted a new document outlining how they’ll tackle the stablecoin threat. Reuters quoted them as saying:

“The ECB and other EU central banks could usefully explore the opportunities as well as challenges of issuing central bank digital currencies including by considering concrete steps to this effect.”

This draft was prepared by the Finnish EU presidency.

“At the very least, we need a robust regulatory framework to deal with virtual currencies,” added Markus Ferber, a German conservative who leads the largest EU Parliament grouping.

“The (executive EU) Commission has been way too ... complacent on the issue so far. With the threat of Libra on the horizon, it is time for action now.”

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Some reporters have wondered if “the time for action” means the EU may create its own stablecoin — a type of ‘eurocoin’ as it were. The comments come from the fact that the document also states that the European Central Bank may “assess the costs and benefits of central bank digital currencies.”

But further documents show that “There’s absolutely no commitment at this stage to put in place a new cryptocurrency,” adding:

“The statement is to highlight the need for a proper regulatory framework for those stablecoins and as a consequence, different ideas should be explored. One of them is the possibility of having something that is managed by the ECB [European Central Bank] and other central banks.”

Keep in mind, however, that this document is only a draft. The final document is yet to be finalized and then possibly adopted by the EU on Dec. 5, at the finance ministers’ next meeting.

Posted by R.R. Hauxley

R.R. Hauxley traveled around the world ... 1 year on 1 Bitcoin. 20 countries, 12 months, 1 Bitcoin. He wrote a book about it: Stolen Wallets and Where to Buy Them. Along the way he met and interviewed the sharpest, brightest minds in crypto today: Vitalik Buterin, Charlie Lee, and more. Today Rafael educates the crypto curious and delves further into the incredible world of blockchain.

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