BRUSSELS: The European Union’s finance commissioner pledged on Tuesday, if he is reappointed, to propose new rules to regulate virtual currencies such as Libra, the currency Facebook plans to launch.
Valdis Dombrovskis has resisted regulating digital currencies and making systemic changes to tackle money-laundering in the five years he has served so far.
However, France and Germany have said that Libra, whose size would dwarf the effect of cryptocurrencies such as bitcoin, could limit their monetary sovereignty.
“Europe needs a common approach to crypto-assets such as Libra. I intend to propose new legislation on this,” Valdis Dombrovskis told EU lawmakers in his confirmation hearing.
He said that, in regulating virtual currencies, the EU should tackle “unfair competition, cybersecurity, and threats to financial stability”.
The EU currently has no specific regulations on cryptocurrencies, which, until Libra was unveiled in June, had been considered a marginal issue by most decision-makers because only a tiny fraction of bitcoins or other digital coins are converted into euros.
But Facebook’s plans have triggered a rethink, and the EU is now also pushing the G20 for global action on digital and cryptocurrencies.
Dombrovskis said the Libra project, although not yet operational, could pose risks to financial stability because of its scale, as Facebook’s millions of users in Europe would be able to use the new digital currency.
He said the new rules should focus on defending financial stability, protecting consumers and tackling the risks of money being laundered using crypto-assets, which can cross borders with ease.
Dombrovskis, a former prime minister of Latvia, had resisted such measures despite a series of scandals at banks in his home country, other Nordic states and larger EU countries - but said the EU now needed a rethink of its mechanisms to counter financial crime.
He also said he saw “a lot of merits” in transferring some supervisory powers to an EU body, without clarifying whether this would entail setting up a new anti-money laundering agency or beefing up existing watchdogs.
In his address to lawmakers, Dombrovskis also pledged a “sustainable Europe investment plan” to unlock 1 trillion euros ($1.1 trillion) of private and public green investment over the next decade.
He said the plan would be based on guarantees and funds provided by the EU budget and the European Investment Bank, although most of the money is expected to come from the private sector.