- The European Commission has announced that it will release a new set of guidelines later this year.
- The guidelines would specifically emphasised stablecoins, including Facebook’s very own digital currency, Libra.
- The legislation would aim to provide protection and security to the customers without having an impact on the innovation of the cryptocurrency industry.
Recently, a few days ago, the European Commission has announced that it will release a new set of guidelines later this year. The guidelines would aim at the betterment and development of a stable crypto asset market. It specifically emphasised stablecoins, including Facebook’s very own digital currency, Libra. Although crypto assets have offered users with lots of advantages, the regulators have been trying very hard to catch up with the cryptocurrency industry.
‘Libra’ Questioned By The European Commission In 2019
In 2019, Facebook’s Libra questioned by the European Commission upon its user privacy, financial stability, and security. European Commission officials also investigated the ability of an entity to work with counter-terrorism finances and money laundering policies.
Facebook was already having a bad period as they lost the backing provided by PayPal, and this just added to it’s greater ill luck. This was done to determine whether Libra should be regulated or not just in case it allowed operations in the EU Region.
The Need Of New Regulations
The financial services commissioner Valdis Dombrovskis of the European Commission said in the Digital Finance Outreach Conference that legal certainty has always been a hurdle in the development of a stable crypto asset market in the EU. Hence to solve the bridging gap, the European Commission has pledged to work on it actively and put forward suitable legislation sometime this year.
The legislation would aim to provide protection and security to the customers without having an impact on the development of the industry. Dombrovskis further added that Europe had become an important financial hub in the past few years, hence it is ready to build the set of rules.
Rules Will Be Proportionate To The Risk
Although the current EU laws do cover some parts of the crypto industry, the executives said that they want to make some changes in the existing law. Under this new set of rules, the intensity of the rules would be proportional to the amount of risk that a particular asset or the company could impose on the users.
This means that for low-risk protocols, the rules would be lower in number and simpler. However, for big projects like Libra, which could potentially cause difficulties and global risks like financial stability and data privacy, the rules would be tighter. The Commission would also increase the cybersecurity guidelines because, according to Dombrovskis, cybersecurity is always the priority.