The European Union’s financial services commissioner has said new laws may be necessary to tackle the regulatory risks of cryptocurrencies and stablecoins, paving the way for a change in the regulation of the sector within the EU.
With specific reference to Facebook’s Libra project, commissioner Valdis Dombrovskis said the EU would require “a common approach” to regulating stablecoins and cryptocurrencies. At a confirmation hearing ahead of his reelection bid Dombrovskis spelled out plans to introduce greater regulation.
Europe needs a common approach on crypto-assets such as Libra. I intend to propose new legislation on this.
One of the 28 EU Commissioners, Dombrovskis has been tasked with safeguarding financial stability, capital markets and financial services since 2014.
The Latvian politician, a former prime minister, has also been vice president of the European Commission for the euro and social dialogue over the same period.
His remarks come at a time of growing scrutiny of Facebook’s Libra project from lawmakers in Europe and elsewhere, as regulators work to mitigate the risks of the social giant’s proposed new crypto payments technology.
Press reports this week have uncovered moves from the EU Commission to gather more information from Facebook and the Libra Association, including about the risks to financial stability and reserves.
Suggesting there is a “strong willingness to act at an EU level” in delivering regulation of the project, Dombrovskis said the EU would examine the detail before deciding whether and how best to regulate Libra and other stablecoins.
The news follows a matter of days after PayPal announced it was withdrawing from the Libra project.
Since it was announced in recent months, Libra has been the subject of intense criticism and scrutiny from regulators, lawmakers and central banks worldwide. With concerns over the risks posed by the cryptocurrency, including to the wider financial system, the Libra Association and Facebook have been increasingly forced to defend the proposals to regulators.
With the EU now mobilizing to introduce regulation of the stablecoin at a regional level, it looks like Facebook could have a mission on its hands to comply ahead of its proposed 2020 rollout across the EU and beyond.
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