New regulation principles to govern digital currencies are in the works by the European Union’s finance commissioner after fears ignited by Facebook’s planned Libra coin launch, Reuters reported on Tuesday (Oct. 8).
France and Germany are among the many countries alarmed that the size and scope of Libra could disrupt legal control over the currency. The EU largely rejected regulations on cryptocurrency until Libra was announced in June.
“Europe needs a common approach on crypto-assets such as Libra,” European Commission Executive Vice President-Designate Valdis Dombrovskis told EU lawmakers in a confirmation hearing reported by Reuters. “I intend to propose new legislation on this.”
Over the course of the five years Dombrovskis has been the European commissioner for financial stability, he avoiding controlling digital currencies. He changed his stance after Facebook announced plans for Libra, a cryptocurrency that “could have systemic effects on financial stability,” he told lawmakers.
At a G20 meeting planned for Oct. 19-20, European Union finance ministers will reportedly tell their counterparts that a worldwide regulatory response is needed to so-called stablecoins like Facebook’s Libra. The ministers are also asking for G20 partners to reform the taxation of digital firms next year as well as face trade tensions, which, according to the terms-of-reference document, “put global growth at risk.”
The EU will tell G20 partners at the meeting of central bankers and finance ministers in Washington that “latest developments with regard to stablecoins and the multi-faceted regulatory, oversight and supervisory challenges these represent, call for seamless cooperation and concerted response at global level,” Reuters reported Oct. 4.
Germany and France — EU heavyweights — have criticized Facebook’s cryptocurrency effort and said it presents a risk to the sovereignty of the EU states. The European Central Bank has also asked for strict Libra oversight and will reportedly make a presentation of the report at the G20 meeting.
News reports indicate that Facebook has the most name recognition in terms of stablecoins, which are digital currencies backed by assets like gold, short-term government securities or traditional money deposits.