Why does EU fear Facebook’s Libra?

0

Last Updated on 20 September 2020 by CryptoTips.eu

Jeroen Kok

Jeroen is one of the lead copywriters on Cryptotips.eu and discusses all recent events in the crypto market. This includes news updates, but also price analyzes and more. He developed his passion for cryptocurrency during the bull run in 2017. He has learned a lot since then. The combination of cryptocurrency and creative writing is perfect for Jeroen and an excellent way to share his knowledge with a wide audience. Find me on LinkedIn / [email protected]
View all posts

The 27 member states of the European Union have been steering clear of the ongoing trade war between the US and China. Whereas both superpowers are trying to gain the upper hand, the EU is working in the background on more futuristic endeavors, such as battling climate change, fighting for LGBTQ rights and … regulating cryptocurrencies.

As more and more member states (Malta and Germany come to mind) seem ready to start designing their own rules if Brussels doesn’t act, the Commission readied a wide text this week, laying down its plans to try and control digital currencies. Its main focus seems to be on the so-called stablecoins, the digital tokens backed by sovereign currencies. The future crypto of Facebook, known as Libra, seems to strike fear deep within the heart of the EU as it would mean that Europe would give up control to a US company when it comes to money matters.

Already in June, Valdis Dombrovskis, the Commission vice-president for financial services, claimed he believes:

That Europe is in a position to lead the way on regulation.

Advertentie.

Dangerous Libra

Stablecoin supporters believe that their type of crypto coins avoid the big volatility usually seen with Bitcoin and many altcoins, but regulators worldwide fear that these digital currencies could therefore also take over fiat currencies. In doing so, this would leave governments without the possibility of controlling the value of money.

Imagine the FED or the ECB unable to decide interest rates, print additional funds or decide upon stimulus packages because the Euro or Dollar would play second fiddle to any stablecoin.

The one that seems to have the most potential is Facebook’s Libra coin, which can immediately reach 2.7 billion users around the world if it is ever launched.

French finance minister Bruno Le Maire therefore warned that his country:

Will not accept that Libra is transformed into a sovereign currency that can endanger financial stability.

Regulation by 2024

The EU document of which Reuters reported first on Friday, seems to set as its main aim to have regulation in place within the foreseeable future, stating:

By 2024, the EU should put in place a comprehensive framework enabling the uptake of distributed ledger technology (DLT) and crypto-assets in the financial sector. It should also address the risks associated with these technologies.

With that in mind, Facebook CEO Zuckerberg knows now which clock he has to beat.