Some of the largest economies in Europe are calling for strict regulations to govern the cryptocurrency industry. France, Italy, Spain, the Netherlands, and Germany urged the European Commission to formulate policies that preserve the region’s monetary sovereignty. In a joint statement, finance ministers from these five European countries called on the European Commission to ensure that these regulations are enforced to protect consumers and preserve state sovereignty in monetary policy. The countries are seeking to prohibit the use of stablecoins until proper regulations are passed.
“Stablecoins must be pegged at a ratio of 1:1 with fiat currency.”
According to the Reuters report, the Commission must also prohibit the use of stablecoins in the region “until legal, regulatory and oversight challenges had been addressed.” Europe is in the spotlight in the emerging stablecoin race, with Facebook’s Libra Association being based in Geneva, Switzerland. The ministers also stated that stablecoins must be pegged at a ratio of 1:1 with fiat currency, “with reserve assets denominated in the euro or other currencies of EU member states, and deposited in an EU-approved institution.
All entities operating as part of a stablecoin scheme must also be registered in the EU.
The ministers also proposed that all entities operating as part of a stablecoin scheme must also be registered in the European Union. The German Finance Minister Olaf Scholz said that it’s their task to keep financial markets stable. This task has been the responsibility of the state, and it must remain so, he added. He further believes that authorities must take a strict approach towards the industry, banning any private company that doesn’t adhere to all the requirements.
French Finance minister Bruno Le Maire remarked that they are 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.