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The EU council and Commission took their press section to release a joint statement, clearly proclaiming their take on stablecoins and what must be done before any of such digital coins are traded in any EU country.
In the joint statement, the Council and Commission acknowledge the benefits virtual assets such as stablecoins bring with them; nonetheless, they quickly added the risks associated with holding this form of virtual currency.
The statement reads:
“So-called ‘stablecoins’ may present opportunities in terms of cheap and fast payments, especially cross-border payments. At the same time, these arrangements pose multifaceted challenges and risks related for example to consumer protection, privacy, taxation, cyber security and operational resilience, money laundering, terrorism financing, market integrity, governance and legal certainty.”
Even worse, the statement continues, recent cryptocurrency projects on a global scale fail to address the issue of legal clarity amongst other concerns. Needless to say that lack of adequate information makes it extremely difficult for governments and other regulatory bodies to reach definite conclusions on “whether and how” existing regulatory frameworks apply to these crypto projects. With the cons that stablecoins possess, it could lead to grave consequences if left uncontrolled.
Therefore, the Council and Commission stated that “global ‘stablecoin’ projects and arrangements should not come into operation until all of these risks and concerns are properly addressed.”
In conclusion, the joint statement stresses that unless firms or entities looking to issue stablecoins provide adequate info on relevant areas of the said digital coin, it should not be allowed to be traded in the EU.
Also, the joint statement analyzed the importance of tackling challenges relating to stablecoins with a coordinated global response. Therefore, the “Council and the Commission are willing to act swiftly, in cooperation with the ECB and with national and European Supervisory Authorities” in addressing any issue relating to this class of assets.
Unlike Bitcoin(BTC)trade and other types of traditional cryptocurrencies, stablecoins are considered the most stable form of all emerging virtual currencies. That is not much of a shocker as these class of digital assets are typically pegged to a fiat currency, and thus reducing the amount of risk associated with using the virtual coin.