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The European Union is preparing a new cryptocurrency regime that could include stricter requirements for Global Stablecoins
PAR002_123 • Jun 27, 2020
EU Creating a Regulatory Regime for Crypto-assets and distributed ledger technology and plans to present legislation in this area later in the year, Says Economic Chief
At the Digital Finance Outreach 2020 Closing conference, the EU’s Executive Vice-President Valdis Dombrovskis explained the future of digital assets. He spoke on the regulation of the digital finance industry
that will enable countries to make the most out of digital finance by reducing regulatory barriers.
Valdis Dombrovskis said,
"Crypto-assets and Distributed Ledger Technology will be our first test case.They have the potential to bring benefits to consumers, businesses as well as market participants.Cheaper and faster payments, for example – or new funding sources for smaller businesses."
The bloc’s lead economic minister stated that the EU is looking at new regulatory frameworks for cryptocurrency that could include a stricter framework for Global Stablecoins. He added,
"with crypto-assets like Stablecoins - whose value is pegged to a currency like the euro or to a basket of currencies - we need to distinguish between ‘Global Stablecoins’ and those created by smaller start-ups and FinTech innovators. If they reach a global scale, Stablecoins are likely to raise additional challenges in terms of financial stability and monetary policy. In these cases, because of their potentially systemic role, our rules will be stronger."
He stated,
"For those crypto-assets that are not already covered by present regulations, rules will be made proportionate to the level of risk of the project. The aim is to make sure that risks are addressed, and that investors and users have a clear understanding of them.”
According to Dombrovskis, lack of legal certainty is one of the growing barriers to developing a major crypto market in the EU. He emphasised the requirement of continuing regulation and supervising risks appropriately to preserve trust in finance. He stated that this is a good chance for Europe to strengthen its international standing and to become a global standard-setter, with European companies leading new technologies for digital finance.
While Dombrovskis’ speech contained few specifics, he did say that the EU was particularly keen to bring stricter rules on any project deemed to be a Global stablecoin.
“Overall, our approach will be proportionate and relate to the level of risk. That means lighter rules for less risky projects,” Dombrovskis concluded. In the case of Global Stablecoins, such as Libra, “their potentially systemic role means our rules will be stronger. We plan to present legislation in this area later in the year."
The European Union is preparing the digital finance strategy which is expected to be released late 2020.
REFERENCE: Speech - 23 June 2020
Speech by Executive Vice-President Valdis Dombrovskis at the Digital Finance Outreach 2020 Closing conference
(https://ec.europa.eu/commission/commissioners/2019-2024/dombrovskis/announcements/speech-executive-vice-president-valdis-dombrovskis-digital-finance-outreach-2020-closing-conference_en)
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