The rise of Libra, the new cryptocurrency by social media giant Facebook, has prompted EU regulators to consider adopting a common policy on digital currencies. According to Valdis Dombrovskis, Executive Vice President-Designate of the European Commission, "Europe needs a common approach on crypto-assets such as Libra (…) I intend to propose new legislation on this."
The EU has never considered regulating cryptocurrencies, as only a small fraction of them are ultimately converted into Euros. With Libra being a game-changer, France and Germany fear for their monetary sovereignty, as millions of Europeans may turn to it for their online payments.
This week the EU has sent a questionnaire to the Libra Association (which includes eBay, Uber, and Spotify), with the aim of gathering further information on financial stability, data privacy, and money laundering risks. PayPal has recently withdrawn from the Association.
In the meantime, the European Union is also pushing for the G20 to adopt a global policy on “stablecoins”, cryptocurrencies backed by real financial assets as in the case of Libra.