EU Will Opt Against Issuing Stablecoins, Instead Choosing to Regulate Existing Stablecoins
- Stablecoins are digital assets that are pegged directly to a currency or commodity.
- The EU is expected to approve the new declaration on stablecoins by December 5th.
Stablecoins are one of the most consistent assets of the cryptocurrency industry, and there have already been many countries and companies to come out with their own versions. While the idea of having an asset pegged to an asset is appealing to some, the European Union is notably setting themselves apart. While the EU isn’t launching their own stablecoin, they have decided to look at how to regulate these assets.
A group of individuals within the EU presidency is working to develop their own guidance on regulating stablecoins, according to someone familiar with the matter who spoke with CoinDesk. The story was originally reported by Reuters, and the declaration will specifically state that the EU should regulate stablecoins.
The source told CoinDesk, “This is a rather short declaration that is about the EU position on how to handle those new types of cryptocurrencies,” the source told CoinDesk. “The focus is on how those cryptocurrencies should be regulated.”
This declaration is meant to come in response to the launch of Libra by Facebook. Even with many regulatory concerns, Libra hasn’t slowed or stopped the progress on their goal of launching next year. The governing council for the asset formally signing onto the project in October. While the declaration expresses the need to regulate stablecoins, it doesn’t state that the EU should create its own cryptocurrency in response. Instead, according to the source, the idea of launching a stablecoin is more of an idea that “should be explored,” though there’s no indication right now that the EU is going to explore it.
The source added, “The statement is to highlight the need for a proper regulatory framework for those stablecoins and as a consequence, different ideas should be explored. One of them is the possibility of having something that is managed by the ECB [European Central Bank] and other central banks.”
At this point, a summary on what the final declaration will say isn’t something that the source feels confident in speaking to. However, on November 8th, the statement will be officially finalized before being presented to the finance ministers of the EU. However, the EU is expected to adopt the declaration on December 5th, which is the next meeting of the finance ministers, says the source.