Commission to present ‘strong’ rules for Facebook’s Libra

The European Commission will present later this year new rules to develop a “sound” crypto-asset market in the EU, including for stablecoins such as Facebook’s digital currency Libra, financial services commissioner Valdis Dombrovskis, said on Tuesday.

Crypto assets have brought benefits to consumers and businesses by offering cheaper and faster payments. But regulators are trying to catch up with the fast developing market of these digital currencies.

“The lack of legal certainty is often cited as the main barrier to developing a sound crypto-asset market in the EU,” said Dombrovskis in the Digital Finance Outreach conference. 

To address this regulatory gap, the Commission will put forward legislation in early autumn to try to balance the need of rules to protect customers without hampering the innovation of a developing sector.

“I believe that Europe is in a position to lead the way on regulation,” said Dombrovskis.

Current EU law partly covers some crypto-assets, although the EU executive also intends to make some “adjustments to make sure that they remain fit for purpose”, he added.

In order to fine-tune the existing rules, the Commission will create a ‘sandbox’, a pilot framework with some regulatory flexibility for experimentation “but well-framed and under close supervisory oversight”, he added. 

Valdis Dombrovskis added: “To stay ahead of the game and compete globally, Europe must make the most of digital opportunities. Digital is the future of finance. We have been gathering many views and ideas on how we can best harness of the innovative potential of digital finance. Embracing digital finance and making it mainstream will also help to create jobs and economic growth for Europe as our countries recover from the coronavirus pandemic. At the same time, we need to continue regulating and supervising risks appropriately. Strong regulation and supervision are key to preserving trust in finance, both for traditional and for new players. ”