Facebook’s Libra project has been tormenting regulators and central banks worldwide, as the token gears up for launch in 2020. Now it’s the turn of regulators in the European Union (EU), who are reported to be struggling to decide how best to regulate the cryptocurrency and the wider sector.
According to a memo released this week by Executive Vice-President Dombrovskis of the European Commission, the EU has thus far failed to secure appropriate assurances from Facebook about the project.
In an acknowledgement the EU is unsure how to proceed, the Commission claims the information it has received from Facebook “remains insufficient for determining the precise nature of Libra and, by extension, its relation with existing EU law.”
Should the necessary information be provided by Facebook, the Commission is “willing to act swiftly” to develop regulation and oversight for the instrument, as for stablecoins more generally.
The statement backs up earlier commitments from the Commission, which said it was standing by to regulate stablecoins and to respond to any risks that might be posed by stablecoins to the wider financial system.
The comments show the Commission is still unsure about how it should regulate the stablecoin, echoing concerns raised by other regulatory bodies about the impending launch of the Facebook stablecoin.
Authorities in the United States have been equally perplexed by the plans, and with wider regulation of the crypto sector. Like the Commission, U.S. regulators are weighing up the need to regulate with the stifling impact of overregulation on a potentially significant emerging sector of cryptocurrencies in stablecoins.
Regulators are also mindful of the future role of central bank digital currencies, and the effects regulation could have on innovation and development within this use case.
U.S. authorities have also pointed to vague interactions with Facebook, including comments from CEO Mark Zuckerberg before the U.S. House of Representatives Financial Services Committee in 2019, when he said even he didn’t know whether Libra would prove successful, saying “I actually don’t know if Libra is going to work.”
While the best policy response remains elusive to regulators in both the United States and the EU, Facebook moves ever closer to the launch of its stablecoin. The initial launch is expected in the coming months.
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