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ECB Executive Calls Libra A “Wake-Up Call”, Calls For Swift Regulatory Action

A member of the European Central Bank has recently said that European financial regulators should act swiftly regarding Libra. Moreover, Facebook’s crypto is described as a crypto “wake-up call” for regulators and public authorities alike.

Libra is a “wake-up call” for regulators

This story was first covered by Bloomberg. According to Benoit Coeure, an executive board member of the European Central Bank, developing new asset classes – such as cryptocurrencies – without regulations is irresponsible. 

Coeure spoke in Aix-en-Provence, and shared some criticism towards how financial regulators have hitherto acted in relation to cryptocurrencies. “We [as in financial regulators] have to move more quickly than we’ve been able to do up until now.”

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Coeure went on to acknowledge that the development of digital assets has revealed multiple gaps in existing financial regulations. What’s more, he also dished out some criticism relating to banks’ slow acceptance and adoption of new technology.

“All these projects are a rather useful wake-up call for regulators and public authorities, as they encourage us to raise a number of questions and might make us improve the way we do things.”

Up to this point, the ECB has generally viewed crypto assets with caution. For example, one ECB official called crypto a fairytale that’s a “complete load of nonsense” earlier this year. 

Is regulation good or bad?

Nevertheless, it should be noted that the agency has previously discussed both drawbacks and benefits with implementing their own central bank digital currencies.

Now it would appear that the ECB has warmed somewhat to cryptocurrencies – at least if Coeure’s comments are to be believed. Some observers have suggested that Facebook’s Libra crypto could pave the way for broader crypto adoption.

Most notably, it is widely believed that Facebook may prompt regulators to take action and develop legal frameworks for cryptocurrencies. Consequently, other cryptocurrencies – such as Bitcoin and Ethereum, among others – may follow in Libra’s regulatory wake.

Put simply, this would mean that Facebook would use its organizational muscle and influence to fast-track crypto regulations. Coeure’s comments certainly lend some further credence to this view. 

What’s more, the CEO of the payments company Circle, Jeremy Allaire, recently said he believes Libra will trigger the development of national digital asset policies. At the same time, some cryptocurrency supporters are wary of them. Specifically, there is a very real fear that strict regulations may stamp out smaller startups and only benefit larger actors.