Valdis Dombrovskis, EU’s Economic Vice President of European Commission said that European Union is preparing to a new regulatory regime for cryptocurrencies that would allow the bloc to hold stricter requirements for projects of “global stablecoin”.
Earlier in the week Valdis said in a speech at Digital Finance Outreach 2020 “This is a good chance for Europe to strengthen its international standing and to become a global standard-setter, with European companies leading new technologies for digital finance.”
The first test case of this regime framework is going to be cryptocurrency, Valdis said. Although European Law strictly regulates certain cryptocurrencies like security tokens, a large part of the cryptos remain unregulated, the most notable one being stablecoins. Dombrovskis elaborated, “Lack of legal certainty is often cited as the main barrier to developing a sound crypto-asset market in the EU.”
It is to be noted that many EU countries have taken the regulation in their own hands that leads to damaging the EU’s market integration as a whole, making it a difficult task for companies to deal with the European Union bloc. A fresh regulatory regime is going to tackle this situation of trading discrepancies in the bloc. Cryptocurrency regulation will cover unregulated digital assets, along with consolidating and homogenizing the standard of cryptocurrency trading across the continent.
The regime is set to be unveiled later this year and the exact details it holds still remains unclear. But according to Dombrovskis it is definitely going to support and encourage innovation.
“Stablecoins”, that Dombrovskis mentions, is not clear as to what it means, but it can be used instead of the flat currencies, making it easier to be used cross-border. This can pose as a hindrance to certain presences like Facebook’s Libra initiative. Stablecoins, if it operates like Libra, can pose another challenge in the trading market, disrupting financial stability along with monetary hiccups.