When Facebook announced the launch of its Libra token and accompanying Calibra wallet it, they set out to clear the regulatory pathway for both and have seen significant challenges across the world in this regard. This ranges from lawmakers thinking that the Libra token will be used for crime to concerns about the undermining of economic sovereignty in several regions. One of the many places Facebook has seen push back is within the EU as some members of the European central bank have pushed for it to create its own stablecoin and prevent Libra from taking root within the EU.
Now, according to EU officials, no stablecoin will be allowed to launch within the EU until all risks towards economics sovereignty are assessed by the body itself.
No Way In
This announcement was made in a joint statement by the Council of the European Union and the European Commission (EC) in which was stated that stablecoins provided for a cheap way for consumers to transfer money and carry various financial transactions. However, it does also carry a number of risks that have not been fully assessed. The statement was also approved by the Economic and Financial Affairs Council (ECOFIN) following some new data that was released in a statement back in November.
While the statement has been endorsed, not much is known about what the legal repercussions of it will be and whether it would restrict the Libra token. In the statement, it was once again asserted that the global use of stablecoins will undermine economic sovereignty and this is the major reason for the pushback.
“These arrangements pose multifaceted challenges and risks related for example to consumer protection, privacy, taxation, cyber security and operational resilience, money laundering, terrorism financing, market integrity, governance and legal certainty. [..] These concerns are likely to be amplified and new potential risks to monetary sovereignty, monetary policy, the safety and efficiency of payment systems, financial stability, and fair competition can arise,” the statement says.
The report concluded that solving the challenges associated with stablecoins will need to be a joint effort from multiple authorities in multiple jurisdictions that any stablecoin operator who wishes to launch a token in the EU will need to adhere to all rules and provide an assessment of risk before approval.