The European Commission has listened to concerns expressed by the German, French, Italian, Spanish and Dutch finance ministers about asset-backed crypto-assets, such as Facebook's Libra cryptocurrency. On Saturday 12 September in Berlin, where the informal Ecofin Council meeting was taking place, Valdis Dombrovskis, the Commission’s Executive Vice-President, gave an assurance that this matter will be dealt with in the legislative proposal that the Commission plans to present around 22-25 September.
“Some ministers yesterday expressed some concerns about the risks of so-called stablecoins currently outside our rules. Rest assured that our legislative proposals will address those concerns comprehensively”, he said at a press conference.
On Friday, the five countries issued a joint statement (see EUROPE 12558/2) in which they called for strict regulation of these types of crypto-assets and set out their recommendations in order to preserve the EU’s monetary sovereignty.
In actual fact, the statement was a reaction to the draft regulation planned by the Commission, which was leaked to the press last week and which, according to the ministers, will not be robust enough to block Libra.
We were told that, if all of the ministers' requests were included in the Commission's legislative proposal, it would effectively make the launch of a Euro Libra unprofitable.
For example, in order to gain approval, the Libra Association would not be able to engage in money creation or foreign exchange activities and would have to alter its draft proposal - which does not currently contain provision for users to make a claim on the reserve - and be registered in the EU.
Dombrovskis confirmed that the Commission wants to regulate risks to financial stability and monetary sovereignty related to asset-backed crypto-assets used for payments and tackle the “logical questions” raised by the ministers. He pointed out, however, that the Commission wanted its response to be “proportionate” and also wished to take into account the opportunities offered by crypto-assets.
The Commission's draft text envisages a bespoke approach, with stricter rules for large-scale cryptocurrencies, with respect to obligations, monitoring and a sanctions regime.
These areas would be supervised by a new college of supervisors, chaired by the European Banking Authority (EBA), which would include the national authority of the member state licensing the issuer of the cryptocurrency, the European Securities and Markets Authority, the European Central Bank or any other EU central bank involved. The EBA would also have the power to conduct investigations and impose fines.
Digital finance. The subject of crypto-assets was also addressed on Saturday as part of a broader discussion on financial markets in the digital age. At a press conference, German Finance Minister Olaf Scholz stressed the importance of having “clear ideas on this matter”. “What used to be important was coal and steel, today it's data”, he said.
At the meeting, Luis De Guindos, the Vice-President of the European Central Bank (ECB), briefed the ministers on the Bank's thoughts about the possibility of it launching its own digital currency. “It has pros, it has cons, we’re assessing all of them”, he said.
The conclusions of the working group that was set up by the ECB in February (see EUROPE 12433/20) are expected to be presented to the public in the next few weeks, followed by a public consultation. (Original version in French by Marion Fontana)