With Facebook’s Diem project opening a path for other Big Tech firms to establish their own cryptocurrencies and stablecoins, European Parliament legislators are attempting to give the European Central Bank (ECB) more regulatory power.
“We must not let [Mark] Zuckerberg become a Central Bank,” Dr Stefan Berger, a European People's Party Member of the European Parliament (MEP), told Decrypt via email after proposing amendments to a bill calling for more regulation of digital asset issuers.
The September proposal, the European Commission’s Markets in Crypto-assets (MiCA) Regulation, would mandate that the ECB “establish uniform rules for crypto-asset service providers and issuers at EU level.”
Lawmakers are now debating amendments to the proposal—put forward by European Parliament rapporteur, Dr Berger—which include the ECB “taking a more active role in the authorisation of new cryptocurrencies.” This means the central bank, if things go according to plan, will be able to refuse certain projects from working in the borders of the EU.
If the MiCA is passed, it will arguably make the EU the most crypto-regulated place on the planet.
Dr Berger told Decrypt the ECB must be prepared for the power of global stablecoins, particularly Facebook’s Diem, a stablecoin project aiming to disrupt the traditional payments market with low-fee, scalable and fast settlement features. It was previously known as Libra.
The Libra/Diem project has spooked lawmakers—particularly in the EU—who see the currency, when launched, as a potential threat to the fiscal status quo. Politicians in the EU have since drafted legislation that establishes rules for stablecoins and gives the ECB more powers over the “authorisation procedure of a new crypto currency.”
“Facebook has more than 2 billion users,” said Dr Berger. “By introducing their own currency, it could gain the power of a Central Bank overnight. Currencies, however, do not belong in the hands of a private company. At the end of the day, we must not let Zuckerberg become a Central Bank.”
Gegen eine #Diem-Herrschaft hilft nur ein regulatorisches Bollwerk. Meine Forderung als #MiCA-Berichterstatter: Rolle der #EZB bei Zulassung von #Stablecoins stärken. Fällt ihre Stellungnahme negativ aus, sollte Zulassungsantrag abgelehnt werden. Näheres in der @FAZ @WMussler pic.twitter.com/rbJuY2nrS2
— Dr. Stefan Berger (@DrStefanBerger) March 4, 2021
Dr Berger added that a digital Euro, which is being discussed, would be the “best answer” to a powerful stablecoin like Facebook’s Diem. “I hope the ECB will hurry up with establishing a digital Euro, before everyone including Vatican City have launched a [central bank digital currency],” he said. “We need a safe form of digital money in a fast changing digital world.”
But right now, it looks like institutions like the ECB may be lagging behind big cryptocurrency projects—including Facebook’s Diem.
If they don’t catch up, their money may well be a thing of the past.