Germany, France, Italy, Spain and the Netherlands called on the European Commission to draw up regulation for asset-backed cryptocurrencies to protect consumers and maintain state sovereignty in monetary policy.
The finance ministers of the five European Union member nations said in a joint announcement that the stablecoins shouldn’t be allowed to operate from the struggling 27-member nascent nation state until regulatory, legal and supervision challenges had been addressed.
Stablecoins, a kind of cryptocurrency often backed by conventional resources, leapt onto policymakers’ agendas last year when Facebook revealed plans for its Libra token.
Some central banks and financial regulators, concerned that Libra could destabilise monetary policy, facilitate money laundering and erode privacy, threatened to block it and the project has been delayed and reshaped as a result.
The EU’s regulatory framework for stablecoins should preserve the bloc’s monetary sovereignty and address risks to monetary policy, as well as protecting consumers, the five countries said in a statement issued on the sidelines of a broader meeting of European officials in Berlin.
“We all agree that it is our job to keep financial market stable and to make sure that what’s a job for nations remains a task for nations,” German Finance Minister Olaf Scholz told reporters during a joint statement with his counterparts.
‘VERY CLEAR RULES’
Scholz said authorities should take a tough approach and this should include a ban on any private sector activities if regulatory requirements were not met.
The five countries want all stablecoins to be pledged at a ratio of 1:1 with fiat currency, with reserve assets denominated in the euro or other currencies of EU members states, and deposited in an EU-approved institution.
All entities operating as part of a stablecoin scheme should be registered in the European Union, they said. Such a move would likely impact the Geneva-based Libra Association, which plans to issue and govern Libra.
The association declined to comment. It has previously said that it welcomed regulatory scrutiny.
“We’re waiting for the Commission to issue very strong and very clear rules to prevent the abuse of cryptocurrencies for terrorist activities or for money laundering,” French Finance Minister Bruno Le Maire said.
“The central bank, I mean the ECB, is the only one to be permitted to issue a currency. And this point, it is something which may not be jeopardised or diminished by any kind of project such as the so-called Libra project,” Le Maire added.
The team at Platform Executive hope you have enjoyed this news article. Initial reporting via our official content partners at Thomson Reuters. Reporting by Christian Kraemer and Michael Nienaber in Berlin. Additional reporting by Tom Wilson in London. Editing by Alexander Smith and Elaine Hardcastle.
To stay on top of the latest developments across the platform economy and gain access to our problem-solving tools and content sets, you can become a member for just $7 per month.