- Chief economic minister in the European Union calls for tougher and more stringent regulations to govern the cryptocurrency industry
- Targeting global stablecoin projects such as Facebook’s Libra
In a speech made during the Digital Finance Outreach Conference 2020, Executive Vice President of the European Commission, Valdis Dombrovskis, spoke on the regulation of the digital finance industry, urging EU states to take the step forward in guiding proper regulation of the digital assets.
As the world continues its battle to stop the spread of COVID-19, many states and organizations have turned to digital payments, and Valdis does not expect this trend to go away any time soon. He said,
“Once the crisis passes, I would not expect the process of embracing digitalization to slow down – given how quickly technology evolves and the strong demand.”
The future is pointing towards a digital finance economy, and Dombrovskis is urging the European Union to take the step forward to “embrace digital finance and make it mainstream.” However, the challenge of regulation always arises in light of new technologies given the rapid movement in the field.
To remove these regulatory barriers, the commission is looking to launch a digital finance strategy for Europe later in the year. The strategy will focus on creating laws and regulations to make the most out of digital finance, enabling the continent to compete with the U.S, parts of Asia, and Russia in the space.
Crypto assets at the test
Crypto assets and distributed ledger technologies are the first tests for the commission. The fragmented regulation of crypto across European countries is making it difficult for market integration and companies to carry out businesses freely across the trade bloc. Dombrovskis said,
“Lack of legal certainty is often cited as the main barrier to developing a sound crypto-asset market in the EU.”
While the speech gives little away on the planned crypto regulation regime, Valdis said the new regulation strategy would boost innovation and development in digital finance across Europe through a harmonized rulebook.
A closer look at stablecoins
Valdis also differentiated the need to have a separate regulation handbook for “global stablecoins” backed by fiat currency. He believes global stablecoins such as Libra “are likely to raise additional challenges in terms of financial stability and monetary policy,” hence the need to adopt stringer policies on them.
The speech did not state any specific stablecoin, but the rise of Facebook’s Libra currency has seen several financial authorities take a keen look at the stablecoin.