Less freedom for more security? – On Friday September 11, the finance ministers of five countries called on the European Commission to firmly regulate the issuance of stablecoins .
According to their statement, issuers should not be allowed to operate in the European Union until legal, regulatory and supervisory issues are resolved.
The European Union fears for its monetary sovereignty
The informal meeting of ministers of economic and financial affairs in Berlin was held on September 11 and 12, 2020. Five countries were represented. These were France , Germany , Italy , Spain and the Netherlands .
According to the joint declaration of the protagonists, addressed to the European Commission, cryptocurrencies backed by financial assets represent a threat to the monetary sovereignty of the Eurozone . These are particularly stablecoins . Thus, since the appearance of the Facebook project, Libra, voices are being raised in Europe to firmly regulate the issuance of these digital currencies.
The stablecoins could destabilize the monetary policy, promote money laundering and harming the privacy . The European Commission is therefore in a hurry to establish a clear legal framework for the issuance of these monetary UFOs.
Clear European regulations for cryptos
On September 10, the document on the regulatory framework that will be put in place was leaked . The Commission is expected to present it at the end of September. The courageous reader can peel through the 168 pages of this proposition . Dealing with the regulation of cryptoassets in the broad sense, it is based on the principles of subsidiarity and proportionality .
Certain crypto-assets are not targeted: cryptos assimilated to financial instruments and MNBC / CBDC .
As for token sales, the publication of a whitepaper will be mandatory. The exemptions are as follows:
Tokens distributed free of charge ;
Tokens resulting from the validation of network transactions ( mining / minting );
Non-fungible tokens ;
Token sales addressed to less than 150 people ;
Those for which the amount is less than 1 million euros over 12 months ;
Finally, those which are reserved for qualified investors .
The form and modalities of issuance of these whitepapers are carefully described.
European Union stablecoins
The thorny issue of stablecoins
Regarding stablecoins , the regulatory approach will be strict , and risk-based . The stablecoins that will pass this first filter will then fall under the scope of the Directive on electronic money .
Olaf Scholz , the German finance minister, calls on the authorities to approach the issue harshly . In particular, they should ban any private initiative that does not meet the conditions set.
“We all agree that it is our duty to maintain the stability of the financial market, and to ensure that what is a task for states remains a task for states. “ – Olaf Scholz
Here are the rules suggested by the five countries:
All stablecoins backed by fiat currencies should adhere to a 1: 1 ratio ;
The reserve assets should be denominated in euros or other currency of EU member countries;
These should be deposited in an institution approved by the EU ;
All entities operating a stablecoin system should be registered in the EU .
The last point is highly likely to impact Libra, the eponymous association being domiciled in Geneva .
Bruno Le Maire also alluded to the Facebook project in his statements:
“We are waiting for the Commission to publish very strict and very clear rules to prevent the misuse of cryptocurrencies for terrorist or money laundering purposes. “
“The Central Bank, I mean the ECB, is the only one authorized to issue a currency. And that point is something that cannot be compromised or weakened by any type of project, including the so-called Libra project. “ – Bruno Le Maire
What future for our favorite stablecoins ?
Of course, the intentions of the financial authorities are commendable! Indeed, it is about ensuring legal certainty , supporting innovation , protecting consumers and investors, and guaranteeing financial stability and market integrity.
Although the promises are binding only on those who listen to them, it still seems on first reading that the legislative framework dedicated to cryptos will be clear and permissive for players who respect the rules of the game.
However, criterion is likely to impact the stablecoins most used, including tether . This is because iFinex is not registered in the European Union. And this is also the case with Center, the consortium issuing the USDC …