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EU does not approve cryptos like Libra until assured that they do not create “unmanageable risks”
The Council and the European Commission have ensured that they will not accept new cryptocurrencies in the European Union (EU) until they ensure that these digital assets do not pose unmanageable risks, advocating the creation of “orderly monetary and financial conditions”.
In a joint statement released Thursday, these two European institutions say they are “ready to take all necessary steps to ensure adequate consumer protection standards and orderly monetary and financial conditions”.
“All options must be on the table, including any measures to prevent certain stable cryptocurrencies [digital currencies not subject to market demand and market fluctuation] from giving rise to unmanageable risks,”
This common position of the Council and the European Commission was released at a time when Facebook is talking about creating a digital currency Libra, this year.
The Libra cryptocurrency, which Facebook wants to launch this year, aims to be an alternative payment method to traditional banking channels. Inspired by cryptocurrencies such as bitcoin, digital currency should be managed by a nonprofit consortium. However, the project has already raised serious concerns from the sector, from both central and political banks, as well as regulators, particularly about risks to financial stability.
For the Council and the Commission, for the creation of such assets there must then be legal clarity. “Some recent world-wide projects have not provided sufficient information on how well they intend to manage risks and carry out their activities,” they criticize, pointing out that “this lack of adequate information makes it very difficult to reach definitive conclusions as to whether if and how the current EU regulatory framework applies”.
Therefore, they state that “entities wishing to issue stable cryptocurrencies, or other activities involving stable cryptocurrencies in the EU, must provide full and appropriate information as a matter of urgency in order to allow proper assessment against the applicable rules in force”.