EU finance chief says bloc to regulate crypto assets like Libra

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Crypto assets such as Libra could have a systemic effect on financial stability and should be regulated by the European Union, according to the bloc’s incoming financial services chief.

Speaking to lawmakers during a confirmation hearing at the European Parliament, European Commission Executive Vice-President designate Valdis Dombrovskis said the EU is currently working on a regulatory framework for crypto assets. He added that the impact of these virtual currencies should be examined on a series of areas including financial stability, monetary stability, data protection and anti-money laundering.

"We will need to regulate Libra to supervise it on EU level both from the point of financial stability and protection of investors as well," he said.

Facebook’s plan for a digital currency has run into opposition from regulators around the world, including in Europe. European Central Bank Executive Board member Benoit Coeure, who’s leading a G-7 working group on such assets, has called the project a “wake-up call.’’

Last week, the commission sent a questionnaire to Facebook, asking for more details on the plan, according to a spokeswoman for the EU’s executive and regulatory arm. “And we are still expecting to hear from them,” Dombrovskis said.

Earlier this year the commission started laying the groundwork for new regulations on crypto assets. Some of them are not covered by any existing EU regulations, leaving investors exposed to substantial risks, Dombrovskis said at the time.

Libra compounds the challenge for regulators because of Facebook’s enormous customer base. If crypto currencies become widely used, they could pose a threat to the “monetary sovereignty’’ of nations as well as financial stability, according to Coeure.

The regulatory backlash has left several founding members of Libra undecided over whether to fully embrace the effort, people familiar with the matter have said. PayPal Holdings Inc. abandoned the project last week to focus on its own projects.

Bloomberg News