Author : Tronserve | Wednesday, 9 October 2019
The European Union’s finance commissioner pledged on Tuesday to advise new rules to normalize virtual currencies, in a reaction to Facebook’s (FB.O) plans to introduce Libra, which the EU considers a risk to financial stability. France and Germany have said that Libra, whose size would dwarf cryptocurrencies such as bitcoin, could limit their monetary sovereignty.
“Europe needs a common approach on crypto-assets such as Libra,” Valdis Dombrovskis told EU lawmakers in a confirmation hearing. “I intend to propose new legislation on this.”
The EU has no particular regulations on cryptocurrencies, which, until Libra was released in June, had been considered a marginal issue by most decision-makers because only a fraction of bitcoins or other digital coins are changed into euros. Dombrovskis has opposed regulating digital currencies in the five years he has served so far. He have cleared his change of heart stemmed from Facebook’s plans for Libra, a digital currency that “could have systemic effects on financial stability,” he told lawmakers.
The EU is now also pressing the G20 for global action on “stablecoins,” an EU document circulated last week said. Facebook’s planned Libra is the best-known of the stablecoins - cryptocurrencies backed by assets for instance conventional money deposits, short-term government securities or gold.
Libra’s scale would likely cause risks, Dombrovskis said, due to the fact Facebook’s millions of users in Europe would be able to pay with the new digital currency. An EU Commission official said there was no timetable yet for suggesting the new rules. Dombrovskis said the crypto regulation should focus on protecting financial stability, protecting consumers and addressing the risks of money-laundering using crypto-assets, which can easily cross borders.