Facebook’s planned Stable Coin Libra is again in the crossfire of Valdis Dombrovskis. The EU Commissioner for Economic and Capital Services accuses the Libra Association of a lack of information and is pushing the introduction of the Facebook currency a long way off.
After Project Libra scared off regulators worldwide last year, calm has recently returned around the stable coin in the making. In a statement, the EU Commissioner for Economic and Capital Services, Valdis Dombrovskis, has now once again voiced criticism. According to the statement, the Libra Association has so far failed to disclose sufficiently necessary information.
Libra Association must follow up
The Facebook Association continues to support the introduction of Libra this year. But the headwind is not abating. Dombrovskis repeated his criticism of the currency in a memorandum in which he attests to the Libra project’s lack of information on regulations.
According to Dombrovskis, it is still urgent “to create clarity about the legal status of the Libra initiative”. The available information still leaves many questions unanswered. The European Commission has therefore already sent the Libra Association a questionnaire to obtain further information. However, even “the information provided is still not sufficient to determine the exact nature of Libra and thus its relationship to existing EU law”.
EU comments on Stable Coins
In a joint Stable Coin declaration, the European Council and the European Commission already expressed their concerns on 5 December 2019. They acknowledged that “technological innovations can bring major economic benefits to the financial sector”. Stable Coins have far-reaching benefits for consumers, particularly with regard to cross-border payments.
However, stable coins pose a regulatory challenge in terms of consumer protection, taxation, cyber security, money laundering and terrorist financing. Given the scope and “global dimension” of Libra, these factors are intensified in the case of Facebook Coin. Moreover, the crypto-currency is a potential threat “to currency sovereignty, monetary policy, the security and efficiency of payment systems and financial stability”.
Only when cross-border regulatory frameworks have been created and all risks have been eliminated can the introduction of the currency be negotiated in the European Union. The crumbling Libra Association will therefore probably have to wait until an indefinite period of time.