The European Union, EU can’t regulate facebook’s Libra due to a lack of information on the project. The Commission sent the Libra association a series of questions to obtain more details on the project. The Commission has launched a public consultation which will be open until 19 March 2020.
21 February, 2020 | AtoZ Markets – Governments around the world face difficult choices when it comes to cryptocurrency. They should over-regulate it and risk losing economic benefits, or do nothing and make themselves vulnerable to those who step up. Currently, the European Union does not know what to do with Libra, the digital currency to be published by Facebook in 2020.
Why Can’t the EU Regulate Facebook Libra?
According to a 19 February memo issued by Executive Vice-President Dombrovskis on behalf of the European Commission, the Libra Association did not answer all questions from the EU. As a result, any information provided by Facebook “remains insufficient to determine the precise nature of Libra and, by extension, its relationship to existing European legislation”.
It has repeatedly asked Facebook-launched Libra Association for information on its payment ecosystem and on the eponymous stablecoin. The Commission, the EU’s executive branch, has not yet determined what exactly Libra is.
But he said the Commission wants to “act quickly” by creating regulations for Libra, stable coins and other EU crypto-asset projects. This reaffirms the Commission’s statement of 5 December 2019, that it will control the stablecoins and their “risk” to financial stability.
The information necessary to guarantee appropriate EU regulations on Libra is still missing from the Commission. Mr. Dombrovskis added that a questionnaire had been sent to the association to guarantee better regulatory measures. The statement reads as follows:
“The Commission sent the Libra association a series of questions to obtain more details of the project”
Several Authorities Have Already Raised Various Concerns
Facebook CEO Mark Zuckerberg spoke to a US House of Representatives Financial Services Committee on 13 October. Lawmakers echoed concerns similar to those of the European Commission.
Libra suffered a regulatory backlash after its announcement last year. The lawmakers and agencies around the world asked to halt its development until the Facebook-led project could be reviewed. Facebook CEO Mark Zuckerberg said the Libra association formed its own board with 20 companies in mid-October. It will wait until regulators are comfortable before launching the project.
Zuckerberg said in testimony to a US congressional committee last year that Facebook would withdraw from the project if the association decided to launch before obtaining regulatory approvals.
Government agencies in the United States and the EU are working towards a better understanding of crypto. The Commission started an open public consultation on 19 December 2019 which will be available until 19 March 2020. The Internal Revenue Service in the US is preparing a summit on cryptocurrency on 3 March.
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