German Finance Minister Olaf Scholz spoke out on Friday about proposed cryptocurrencies like Facebook’s Libra and JPMorgan Coin, adding that Berlin would reject them.
Scholz said during a panel discussion at the European Banking Congress in Berlin he doesn’t support privately-issued digital currencies, according to a report by Reuters.
The German official added that while it was essential to boost the digital transformation of Europe’s banking systems, this doesn’t not extend to accept a parallel currency. He also invited the new administration of U.S. President-elect Joe Biden to join a Franco-German proposal aimed to tackle the risks stemming from such new technologies.
Berlin said earlier it will work closely with its European and international allies to prevent cryptocurrencies from becoming alternative currencies.
The European Commission published in September its EU legislative framework for crypto assets, which came as part of the broader policy initiative on digital finance. The proposal offers a bespoke legislative regime for markets in crypto-assets and relevant service providers not covered elsewhere in the EU financial services regime.
In addition, the MiCA will offer a pilot regime for crypto-related market infrastructures, which represents a so-called ‘sandbox’ approach. The term has particular relevance for the crypto industry, and the EU scheme was described as a controlled environment under which new firms or new ventures from established brands would be able to live test their ideas.
The commission further explained that successful applicants can test their new products without the cost of overheads such as compliance and exhaustive consumer protection. This allows ‘temporary derogations from existing rules’ so that regulators can gain experience on the use of distributed ledger technology in market infrastructures while ensuring that they can deal with ‘risks to investor protection, market integrity and financial stability’.
The new rules will also allow operators granted approval in any member state to provide their services at the EU level (passporting). Safeguards include capital requirements, custody of assets, a mandatory complaint holder procedure available to investors, and rights of the investor against the issuer.
The legislative initiative covers activities including crypto-to-fiat and crypto-to-crypto trading, custody, and asset-backed coins. For stablecoins in particular, a bespoke legislative framework is to be considered, and issuers of stablecoins would be subject to more stringent requirements in terms of capital, investor rights and supervision.
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