Time to put order in the wild west of private crypto currencies like Facebook’s planned Libra

"Sound European rules for private initiatives to create crypto currencies, such as the stablecoin Libra planned by Facebook, are of utmost importance. We must prevent potential suppliers such as the Facebook founder Mark Zuckerberg from using their market power to take over the functions of central banks", said Stefan Berger MEP, EPP Group Shadow Rapporteur on a Report on crypto-assets, ahead of this week's presentation of new legislative proposals on digital finance by the European Commission.

He points out that the widespread crypto currency Bitcoin has a circulation of 18.2 million worth €163 billion.

"It is clear that in view of the market capitalisation of Bitcoins, the European Commission's strategy lacked a regulation of Bitcoins and other crypto-assets, given the fact that they can be easily used for criminal purposes", said Berger.

Markus Ferber MEP, EPP Group Spokesman on Economic Affairs, said: “Currently, crypto-assets exist in a regulatory nirvana and this poses big risks in terms of investor protection, market abuse, money laundering and even financial stability. By finally coming up with a legislative proposal, the European Union is showing that it is taking the challenge seriously. Putting projects like Facebook’s Libra under an even tighter regulatory framework is the right move.”

Some crypto-asset facts:

1. Crypto-assets are privately managed and only exist in the digital world. The most known crypto-assets are crypto-currencies like, for instance Bitcoin, but other types exist with specific purposes in the innovative Financial Tech (FinTech) sector.
2. Amongst the innovative advantages of crypto-assets is, for instance, that it will increase the speed and lower the fees in international money transfers. The goal can also be to prove ownership, digitise property or adapt to a specific industry, like accounting.
3. A challenge is that there is no central bank or government to manage the system or step in if something goes wrong.
4. At the start of 2020, over 5,100 crypto-assets existed with a total market capitalisation exceeding $250 billion.