European Union Looking for Strict Crypto and Stablecoin Regulation in the New Draft
The European Commission, the EU’s executive arm, has drafted regulations to strictly supervise cryptocurrencies that it considers “significant,” including assets such as Facebook’s Libra.
The news was first reported on September 10 by the European news agency Euractive, citing a 167‐page draft crypto proposal.
According to the report, the regulation seeks to address bitcoin’s high volatility, as well as “systemic risks posed by Libra” by creating a “new college of supervisors” with existing national and continental regulatory bodies ‐ and a new additional body ‐ all chaired by the European Banking Authority (EBA). Plays.
This law is tied to the level of risk posed by each crypto asset, with strict requirements on issues such as monitoring and obligations applicable to so‐called “important e‐money tokens”.
Considering the example, that the Libra Association, the issuer of Libra, should become a credit institution or electronic money institution under the supervision of the EBA with the help of national institutions. This classification means that Libra and other important e‐tokens will face more authoritarian control compared to other digital companies, Euractive said.
Facebook’s size, authorities around the world fear for the safety of its citizens and digital assets, as well as for its financial stability.
Stable coins are backed by fiat currency reserves. Still, regulators fear this could destabilize monetary policy and allow money laundering.
With having a base of 2.7 billion user base around, thus increasing the fear for Facebook’s Libra. Recently, Stable coins are supported by currencies such as the dollar, gold, and government debt.
Although this decision was backed by countries like Germany, France, Italy, Spain, and the Netherlands said on Friday they would not approve the coins until legal, regulatory and regulatory challenges were resolved, according to Reuters.
Also, the regulators are concerned that this could destabilize monetary policy and initiate money laundering while eroding consumer privacy.
As per the commission’s proposal for such digital assets, the higher-ups suggested that the digital asset developers should issue a “white paper” containing the describing information about the token or trading platform and for further explaining to the potential buyers so that they can make informed purchasing decisions and understand the risks associated with the submission.”
Thus moving further, all of these documents must be approved by national and E.U. regulators before issuers can begin operations.
According to the draft text, the EBA has the power to investigate, impose on‐site inspections and impose penalties equivalent to 5% of the crypto company’s annual revenue “or double the amount of profits or losses avoided by these systemic cryptocurrencies. Violation. “
