Fiat-backed decentralized stablecoins in Europe are reportedly facing the heat from five European (EU) countries. A number of European nations are on the same page as they might move to implement a strict ban on cryptocurrencies and asset-backed digitized currencies.
Meanwhile, five countries including Germany, France, and Spain have asked to control asset-backed digitized currencies. It implies that, until the challenges of regulation and risks have been resolved, the stablecoins must be forbidden within the territories of 27 EU countries.
Moreover, the said countries want stablecoins in Europe to collateralize fiat currency at a 1:1 ratio. In addition, the stablecoins in Europe must have the collateral placed in institutions approved by the European Commission and EU authorities. Lastly, this collateral must be placed in European currencies.
Distress over stablecoins in Europe
Per the German minister of finance, strict measures will be taken against private companies if they decide to use stablecoins in Europe without following regulations. Moreover, companies like Tether could face troubles owing to the watchdog’s scrutinization.
Similarly, Bruno Le Maire, French finance minister, came forward stating strong concerns over terrorism funding and money laundering since these digital decentralized currencies could be used to support such activities. He further confirmed that only the European central bank should have the power to allow these currencies within the limit of it’s jurisdiction.
Since November of 2019, the European Union has been chasing for control over cryptocurrencies. Meanwhile, the statement has also been published by the European Union’s council as they do not want stablecoins until legal issues are resolved. Despite large support, the regulations cannot be allowed until this week. Once again, it is clear that the efforts are being made by the authorities to put the cryptocurrencies into banning state. This is evidenced by the Financial Stablilty Board also recommending a ban on stablecoins in Europe, earlier this year.
Despite news for strict EU regulations to be placed on stablecoins and cryptocurrency in Europe, no practical measures have yet been taken. The hurdles so far also make it appear that the control over cryptocurrencies the European unions can take is still unclear.
For instance, know your customer (KYC) free exchanges Uniswap, Bancor and now Sushiswap allow all ERC20 token to be traded without any control whatsoever. On the other hand, centralized exchanges, payment exchanges, and traders can be prohibited by using cryptocurrencies, but to restrict them would be to put tax paid money on risk.
The leaked draft bill proposes that the likes of Facebook Libra would be facing the toughest regulatory control. However, it appears that there will be no definitive answer as of yet until the EU Union clarifies the exact regulations to be imposed within the region.
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