European Central Bank Wants Total Control Over Stablecoin Issuance
The European Central Bank (ECB) calls on EU lawmakers to confer it with total control over stablecoin issuance within the region.
Reuters reports today that the ECB, via a legal opinion issued on February 19, requested to be given the exclusive right to determine whether a stablecoin will launch within its jurisdiction.
The ECB noted that if stablecoins are not strictly supervised, it could negatively affect the eurozone’s existing payment system.
“Where an asset-reference arrangement is tantamount to a payment system or scheme, the assessment of the potential threat to the conduct of monetary policy, and to the smooth operation of payment systems, should fall within the exclusive competence of the ECB,” excerpts of the ECB legal opinion reads.
The legal opinion is a follow-up of calls made last year September by finance ministers of five European nations, such as Germany, France, Italy, Spain, and the Netherlands, to regulate stablecoin.
At the time, the countries told the European Commission to create regulations for stablecoin in the bloc to protect its monetary sovereignty from private stablecoin providers.
In the joint statement, the finance ministers directed the commission to ban any stablecoin issuer from operating in the region, should it fall below a certain standard.
The standards proposed by the five countries include demanding that all stablecoins will be asset-backed at a ratio of 1:1 with the euro, which will be held in an EU-approved institution.
Also, all stablecoin issuers in the bloc will be required to register as a European entity.
Regulators Concerned About Facebook’s Crypto Project
Although the statement did not reference a particular project, it is believed that the finance ministers were referring to Facebook-backed Libra cryptocurrency, now renamed Diem.
Recall that since the Libra Association declared plans to issue its stablecoin in June 2020, the project has faced several regulatory backlashes, which forced the Geneva-based team to launch several initiatives to woo regulators.
However, regulators are still not comfortable with the project as they fear that the stablecoin, when launched, could have adverse effects on the global payment industry considering Facebook’s large user base of nearly 2.8 billion monthly users.