The European Union has traditionally had a tough stance on Facebook’s budding cryptocurrency, Libra. Now it appears that the European Union wants to tackle these types of digital currencies head-on, as the EU’s finance ministers agree that private digital currencies like Libra should not be allowed.
EU finance ministers prevent Libra from beginning operations
This decision was first shared in a joint statement by the European Council and Commission. This statement notes that “no global ‘stablecoin’ arrangement should begin operation in the European Union until the legal, regulatory and oversight challenges and risks have been adequately identified and addressed.”
As such, the European Union’s decision means a de facto ban on the launch of so-called stablecoins by private companies. For those unfamiliar with the term, stablecoins are generally backed by fiat currencies or other securities.
The joint statement does not make any direct references to the rest of the cryptocurrency sector or other cryptocurrencies.
Consequently, it appears that this statement only forbids the launch of further private digital currencies. Moreover, this would mean that already launched cryptocurrencies and stablecoins, from Bitcoin to Tether, are unaffected by this decision.
Libra could begin operations when risks are “identified and addressed”
In addition to this, European Union ministers also reportedly said that they would consider EU rules to regulate stablecoins and other cryptocurrency assets, as part of a global plan.
Moreover, EU finance commissioner Valdis Dombrovskis recently told finance ministers that the EU commission is already hard at work shaping this new regulation. Additionally, ministers also positively commented on the European Central Bank’s examination of a potential European CBDC.
Interestingly, the document presented to finance ministers also reveals that a public digital currency could become necessary if European payments remain “too expensive”. Moreover, it also went on to highlight several of the positive sides of cryptocurrency usage.
This decision is clearly taking aim at Facebook’s Libra cryptocurrency project. Although it is not mentioned by name in the statement, it is quite clear from previous statements that various heads of state in the EU dislike the premise of Facebook’s cryptocurrency.
Nevertheless, one should also note that this is not closing the door for Libra in Europe completely. If Facebook manages to comply with the various requirements laid out by the EU, it could conceivably receive approval in the future. Also, given enough time the EU could “identify and address” these issues.
With that said, however, it currently seems unlikely that minor tweaks could be enough for Libra to soon be green-lit by European regulators.
Image Source: Reuters
Rasmus Pihl is a writer for Toshi Times by day and an avid follower of the cryptocurrency industry by night. Rasmus holds a Bachelor’s Degree in Marketing from the Gothenburg School of Business, Economics, and Law and runs a Swedish marketing consulting firm. Moreover, when he isn’t writing for Toshi Times, traveling, working or changing the world in some other capacity, Rasmus is more than likely caught up in postgraduate studies.