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European officials are beating their heads, trying to figure out the challenges and risks of letting cryptocurrencies be operational in the region. It is part of a wider debate that seeks to establish the pros and cons of digital transformation of European economies as major nations across the globe embrace digital currencies.
However, the crypto world has now been hit by another storm when the Finance Minister of Germany, Olaf Scholz, categorically rejected the idea of parallel digital currencies such as Facebook Libra to creep into the German markets. He clarified that the German government would be vehemently opposed to any such idea. “We cannot accept a parallel currency,” Scholz said during an event in Berlin. “You have to reject that clearly”.
Although the German Finance Minister expressed his negative opinions about the cryptocurrencies in terms of their operational costs and energy requirements to operate them, he maintained caution about the future of cryptocurrencies in 20 to 30 years.
Facebook Libra has been fighting for its forthcoming cryptocurrency Libra on various political battlegrounds around the world to wade off concerns regarding the financial risks it grafts on business sectors in different regions. Recently, France and Germany both had indicated that failure of Facebook to address these concerns could lead to the blocking of Libra’s authorization in the region.
European legislators have met several times in the past month to discuss the concerns over cryptocurrencies and the potential solutions to those problems. At the start of the month, on 4th September, a panel of legislators discussed the prospects of initial coin offerings (ICOs). A joint statement by the participating legislators agreed that ICOs offer a very interesting and promising vehicle instruments for raising capital but extensive regulation was required to ensure strict compliance with European policies.
Trying to Adopt a Comprehensive Crypto & Blockchain Policy
German policy makers have agreed to explore and determine the first comprehensive blockchain strategy on Wednesday. The document will address the risk factors that come with modernization of the German economy. The blockchain strategy will conceptualize a comprehensive framework for engaging with the international regulatory bodies to prevent stablecoins from becoming parallel currencies in the European markets.
Part of the document was an elaborate discussion agenda with Bundesbank, Germany’s national central bank, that will document the existing state of development of cryptocurrencies and how the operationalization of digital currencies can threaten the financial sector of the country.
So far in Europe, France and Germany have jointly rejected parallel cryptocurrencies. Switzerland is more liberal with its policies for cryptocurrencies. But the future of these virtual currencies in Europe remains bleak as every week brings bad news for the crypto enthusiasts.