European Council and EC adopted a joint statement on stablecoins. According to the statement, stablecoins present opportunities in terms of cheap and fast payments, especially cross-border payments. However, these arrangements pose multifaceted challenges and risks related to cyber-security and operational resilience, market integrity, governance, and legal certainty. The Council and EC stated that no global stablecoin arrangement should begin operation in EU until the legal, regulatory, and oversight challenges and risks are adequately identified and addressed, underlined by the recent report of the G7 working group dedicated to these issues.
The risks raised by stablecoin arrangements should be subject to clear and proportionate regulatory and oversight frameworks, which are established on a sound evidence base and based on general principles and applicable to all stablecoin arrangements. Consistent with the global response, the Council and EC are willing to act swiftly, in cooperation with ECB, the national Supervisory Authorities, and ESAs. This approach should include consultation and development of the evidence base as precursors to potentially developing new legislation for a common EU approach to crypto-assets, including stablecoins.
While European payment systems already made significant progress, European payment actors, including payment services providers, also have a key role to play in this respect. ECB and other central banks and national competent authorities will further explore the ongoing digital transformation of the payment system and, in particular, the consequences of initiatives such as stablecoins. Also, there is a need to ensure legal clarity about the status of stablecoin arrangements. Some recent projects of global dimension provided insufficient information on how precisely they intend to manage risks and operate their business, which makes it very difficult to reach definitive conclusions on whether and how the existing EU regulatory framework applies. Entities that intend to issue stablecoins, or carry out other activities involving stablecoins in the EU, should provide full and adequate information urgently to allow for a proper assessment against the applicable existing rules.
Related Link: Press Release
Keywords: Europe, EU, Banking, Insurance, Securities, Stablecoins, Cyber Risk, Cryptocurrencies, Fintech, Operational Risk, Cross-border Payments, EC, European Council
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