The European Union (EU) is preparing to update its cryptocurrency rules that could make it more difficult for stablecoin projects, such as Facebook Inc.’s proposed Libra, CoinDesk reported.
Valdis Dombrovskis, the EU’s executive vice president of the European Commission for an Economy that Works for People, told attendees of the Digital Finance Outreach 2020, a series of events for the 27-nation bloc on financial technology companies, that Europe must become the leader in crafting rules for digital finance.
“This is a good chance for Europe to strengthen its international standing and to become a global standard-setter, with European companies leading new technologies for digital finance,” he said.
Last fall, the Libra Association petitioned the Swiss Financial Market Supervisory Authority (FINMA) for a Swiss payment system license for its planned cryptocurrency. A decision on its coins, seen as a competitor of Bitcoin, is expected this year.
While some cryptocurrencies, such as security tokens, are regulated by European law, most stablecoins, are not, CoinDesk reported.
“Lack of legal certainty is often cited as the main barrier to developing a sound crypto-asset market in the EU,” Dombrovskis said.
In January, the United Kingdom's Financial Conduct Authority (FCA), the country’s banking regulator, took the reins to oversee cryptocurrency, anti-money laundering and counter terrorist financing activities. The FCA’s move is seen as a way to shift the sector away from the so-called “Wild West” arena in which they operate today.
Also in January, Bank of France Governor Francois Villeroy de Galhau said central banks, not private companies, should be in charge of issuing electronic currency.
Partially brought on by the emergence of cryptocurrencies and Facebook’s upcoming introduction of the Libra coin, central banks have been examining eCurrency as a way to maintain states’ control over money.
Villeroy de Galhau said the plans were not because of Facebook’s Libra, but because of the speed of technology and the desire for digital currency by some banks.
Dombrovskis said a regulatory watchdog for cryptocurrency will cover digital assets and consolidate standards across the continent, according to the report.
The former prime minister of Latvia did not provide details, but said it could be formulated this year.
“Overall, our approach will be proportionate and relate to the level of risk,” Dombrovskis said. “That means lighter rules for less risky projects.”