European Union to Regulate Stablecoins, Not Issue Its Own: Source

6 November 2019

UPDATE (Nov. 7, 2019, 16:55 UTC): The draft declaration, published online Wednesday evening, does not include any recommendations that the EU issue its own stablecoin. However, the document does leave the door open for the ECB and other central banks to “assess the costs and benefits of central bank digital currencies.”The European Union is taking a closer look at how to regulate stablecoins, but has no plans to issue one of its own.

A group within the EU presidency is working on a draft political declaration regarding the regulation of stablecoins, an individual familiar with the matter told CoinDesk. First reported by Reuters, the declaration will say the EU should regulate stablecoins in particular. However, the source pushed back on claims that the declaration would urge the EU to create a cryptocurrency of its own.

“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.”

The declaration is being developed in response to Libra, the global stablecoin project introduced by Facebook in June. Despite regulatory qualms about the stablecoin, Libra has so far proceeded, with its governing council formally signing onto the project last month.

The declaration does not specifically recommend that the EU should develop its own cryptocurrency in response to Libra, however. CoinDesk’s source explained that developing its own cryptocurrency is one possible option for the EU that the declaration says “should be explored.”

Pushing back on the Reuters report, the source said, “There’s absolutely no commitment at this stage to put in place a new cryptocurrency,” adding:

“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.”

The source clarified that they could not speak to what the final version of the declaration would look like.The statement will be finalized by Friday, Nov. 8 and presented to EU finance ministers. The declaration is expected to be adopted by the EU on Dec. 5, at the finance ministers’ next meeting, the source said.

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