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European States Demand Strict Regulation for Stablecoins

European countries seek clear regulatory measures for stablecoins and asset-backed cryptocurrencies. The regulatory policies demand that stablecoins will not operate in the European Union until all issues and challenges related to stablecoins are not addressed.

France, Spain, Germany, Netherlands, and Italy have requested the European Commission to roll out regulations for stablecoins operation in the region. According to the report published by Reuters, the respected countries stress that asset-backed cryptocurrencies will only work in 27 European countries until the issues are touched.

Clear Cut Rules

First, the stablecoins should be backed by the fiat currencies at a fixed 1:1 ratio. Secondly, stablecoins should be collateralized in institutions approved by the European Commission. Thirdly, the operators of the stablecoins must be registered with the European Commission.

The purpose behind the demand for regulations is to ensure that no stablecoin could threaten the monetary policy. According to Reuters’ report:

“Some central banks and financial regulators, concerned that Libra could destabilise monetary policy, facilitate money laundering and erode privacy, threatened to block it and the project has been delayed and reshaped as a result.”

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German Finance Minister Olaf Scholz said,” We all agree that it’s our task to keep financial market stable and to ensure that what is a task for states remains a task for states.”

Scholz further explained that authorities could ban a company if it is does not comply with the issued regulations.

No Involvement in Illegal Activities

French Finance Minister Bruno Le Maire said that we must ensure that cryptocurrencies will not involve in illegal activities. Le Maire said:

“We’re waiting for the Commission to issue very strong and very clear rules to avoid the misuse of cryptocurrencies for terrorist activities or for money laundering.”

“The central bank, I mean the ECB, is the only one to be allowed to issue a currency. And this point, it’s something that cannot be jeopardized or weakened by any kind of project including the so-called Libra project,” he added.

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Hassan Mehmood (Saudi Arabia)

Hassan is currently working as a news reporter for Tokenhell. He is a professional content writer with 2 years of experience. He has a degree in journalism.

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