The European Union is looking to make headway in rule-making for digital finance, starting with digital currencies. A member of the European Parliament disclosed that they are preparing to introduce a new cryptocurrency regime, which will bring stricter regulatory oversight for global stablecoins like Libra.
Europe prepares a new crypto regime
At the Digital Finance Outreach 2020, Valdis Dombrovskis opined that Europe should take the lead in making regulations for digital finance. Dombrovskis, who is the Vice-President of the European Commission, responsible for the Euro and Social Dialogue.
According to his statement, companies in Europe are leading the path in digital finance with the development of new technologies. Thus, now is the best time for Europe to become a global standard-setter by boosting its international presence.
Global stablecoins will face more strict oversight
Dombrovskis went on to emphasize that cryptocurrencies will be the first sector to regulate closely, especially global stablecoins like the Facebook-planned Libra. Security tokens are one other crypto that is regulated under European law; however, global stablecoins are not.
He further emphasized that global stablecoins will possibly undermine monetary and financial stability.
Overall, our approach will be proportionate and relate to the level of risk. That means lighter rules for less risky projects,” Dombrovskis concluded. In the case of global stablecoins, such as Libra, “their potentially systemic role [means] our rules will be stronger.
Moving forward, Dombrovskis explained that legal uncertainty is often seen as a hindrance to the development of the crypto-asset market in Europe. However, he mentioned that the cryptocurrency regulatory regime will stimulate innovation while still covering unregulated cryptocurrencies. It will equally consolidate with existing regulation standards around the world.