European Commission which is the executive arm of E.U. is seeking for the regulations to monitor cryptocurrencies. To make this possible, the EU will set up a new team of supervisors, including the national and European authorities. These cryptocurrencies also include different asset-backed stablecoins like Libra and many others.
It is revealed that in this regulation, the high volatility of various cryptocurrencies will be included. Along with the volatility, the risk associated with digital currencies will also be addressed in these regulations. With this move, the European Commission will become the first major jurisdiction to regulate cryptocurrency.
European Commission believes Europe can lead the regulatory Policy
Valdis Dombrovskis, vice-president for financial services, the European Commission has said that
“I believe that Europe is in a position to lead the way on regulation.” In the present time, there has been a huge increase in the adoption of cryptocurrencies as a lot of people believe it to be the “money of the future”.
Even though people are showing great interest, cryptocurrencies are also on the top target of hackers and money launderers. This is the reason why the European Commission is highly concerned about these regulatory measures for cryptocurrency which are backed by sovereign currency.
Stablecoins can destabilise the global economy
The stablecoins creators and supporters always claim that they are tied with national currencies hence they are not entitled to the risk that is generally there with Bitcoin. However, the regulators are quite concerned that stablecoins can lead to destabilising the global economy. The reason being the huge popularity of stablecoins as they are able to reach a user base of 2.7 billion across the world. With the new regulations, the European Commission is aiming to target all those stablecoins that are backed by any asset which is going to create a better regulatory environment for the global crypto sector.