The Director of the EU and International Affairs Department at the Lithuanian Ministry of Finance clarified that the statement wasn’t aimed solely at Facebook’s Libra.
“This is not just about Facebook. In reality, there isn’t a single mention of Facebook in the statement. The Facebook initiative ignited this discourse. However, the EU’s stance applies to all Stablecoin projects.”
According to the director, the commission aims to clarify its position on Stablecoins ahead of any launch.
Trakelis mentioned that this will assist businesses in comprehending the regulatory landscape in the EU before they introduce token-based projects, emphasizing that “The joint statement does not imply that the EU is against innovation or simplified payments. The EU seeks to safeguard consumers and maintain the financial stability of EU member states.”
The EU has raised several concerns and has issued a questionnaire to the social media giant but is still awaiting responses.
“Currently, we don’t have detailed information regarding the structure of Libra. Efforts have been made to acquire more data and prepare for any potential risks. Thus, the statement was released – highlighting that all relevant regulatory and legal risks should be identified prior to launching any of these operations,” he elaborated.
Key points from the joint statement include:
- Stablecoins may offer opportunities for affordable and swift transactions;
- Stablecoins bring forth diverse challenges and risks (consumer protection, taxation, monetary sovereignty, etc.);
- Stablecoins should not jeopardize the existing financial and monetary structure, nor monetary sovereignty in the EU;
- There is a crucial need for legal clarity regarding the status of Stablecoin frameworks, and entities intending to issue stablecoins or engage in related activities in the EU must urgently provide comprehensive and transparent information;
- Addressing the challenges posed by “Global Stablecoins” necessitates a coordinated global response;
- The rise of stablecoins underscores the need for ongoing enhancements to payment systems.
Joint statement by the Council and the Commission on “stablecoins”
Council of the EU Press release 5 December 2019 12:54
Reference: https://www.consilium.europa.eu/en/press/press-releases/2019/12/05/joint-statement-by-the-council-and-the-commission-on-stablecoins
The Council and the Commission released the following statement:
“1. Technological advancement can yield significant economic advantages for the financial sector, fostering competition and financial inclusion, enhancing consumer choice, boosting efficiency, and offering cost savings for financial institutions and the broader economy.
2. The so-called “stablecoins” may create opportunities for low-cost and rapid payments, particularly in cross-border transactions. However, these systems introduce complex challenges and risks related to consumer protection, privacy, taxation, cybersecurity, operational resilience, money laundering, terrorism financing, market integrity, governance, and legal certainty. If a “stablecoin” initiative has the potential for global reach, these concerns may become more pronounced, leading to new risks for monetary sovereignty, monetary policy, payment system efficiency and safety, financial stability, and fair competition.
3. As emphasized by the recent report from the G7 working group focused on these matters, global “stablecoin” projects and frameworks should not commence operations until all associated risks and concerns have been properly addressed. We reaffirm our commitment to addressing the challenges posed by these initiatives based on a shared EU understanding and coordinated approach. These initiatives must not threaten the existing financial and monetary order, nor monetary sovereignty within the European Union.
4. There is an urgent need for legal clarity regarding the status of “stablecoin” frameworks. Many recent global projects have failed to provide adequate information on how they intend to manage risks and operate. This lack of transparency makes it challenging to determine the applicability of existing EU regulatory frameworks. Entities planning to issue “stablecoins” or engage in related activities within the EU must urgently provide comprehensive and transparent information to facilitate an accurate assessment against applicable regulations.
5. Addressing the challenges posed by “global stablecoins” necessitates a collaborative global response. The risks associated with “stablecoin” frameworks should be subject to clear and proportionate regulatory and oversight frameworks, based on solid evidence and applicable to all “stablecoin” systems. In line with this global response, the Council and the Commission are prepared to act swiftly, in partnership with the ECB and national and European supervisory authorities. This approach will involve consultation and the development of the evidence base as prior steps to potentially developing new legislation for a unified EU stance on crypto-assets, including “stablecoins”. While the Council and the Commission are dedicated to creating a framework that leverages the potential benefits of crypto-assets, we acknowledge the existing risks. The Council and the Commission are prepared to take all necessary measures to ensure high standards of consumer protection and maintain orderly monetary and financial conditions. All options remain viable, including measures to mitigate risks posed by certain global “stablecoins”.
6. In light of the aforementioned points, the Council and the Commission assert that no global “stablecoin” framework should commence operations within the European Union until all legal, regulatory, and oversight challenges and risks have been adequately identified and addressed.
7. The emergence of “stablecoin” projects highlights the necessity for continual enhancements to payment frameworks to fulfill market and consumer expectations for convenient, swift, efficient, and affordable payments – particularly in cross-border situations. Although European payment systems have made substantial progress, European payment stakeholders, including service providers, play a critical role in this process. We note that the ECB and other central banks and national authorities will continue to explore the ongoing digital evolution of payment systems, especially the implications of initiatives like “stablecoins.” We welcome the cooperation of central banks and relevant authorities in assessing the costs and benefits of central bank digital currencies, and engaging with European payment stakeholders regarding the role of the private sector in fulfilling expectations for efficient, rapid, and cost-effective cross-border payments.”
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