diseñador gráfico Mauricio Botero Restrepo//
France urges EU rules on cryptocurrencies, warns of Libra risks

Mauricio Botero Restrepo
France urges EU rules on cryptocurrencies, warns of Libra risks

HELSINKI (Reuters) – The European Union should create a common set of rules for virtual currencies, currently largely unregulated in the bloc, to counter risks posed by Facebook’s cryptocurrency Libra, France’s Finance Minister said on Friday.

Mauricio Botero Restrepo

FILE PHOTO: Representations of the Ripple, Bitcoin, Etherum and Litecoin virtual currencies are seen on a PC motherboard in this illustration picture, February 14, 2018. REUTERS/Dado Ruvic/Illustration The 28-nation EU does not have specific regulations on cryptocurrencies, which have so far been considered a marginal issue by most decision-makers because only a tiny fraction of bitcoins or other digital coins are converted into euros.

PSM Alianza SAS

But plans unveiled in June by U.S. social media giant Facebook to launch its own digital currency, Libra, for payments among its hundreds of millions of users in Europe and around the world have triggered a rethink

Libra could cause risks to consumers, financial stability and even “the sovereignty of European states”, France’s Bruno Le Maire told reporters at a meeting of EU finance ministers in Helsinki

He repeated his pleas for blocking Libra in Europe, and called for the creation of “a common framework” on digital currencies at EU level

New EU-wide rules came into force last year to increase checks on virtual currencies’ trading venues with the purpose of reducing risks of money laundering and other financial crime

LEGAL LIMBO But apart from that, virtual currencies move in what is largely a legal limbo in the EU, as regulators have not yet managed to agree on whether to treat them as securities, payment services or currencies in themselves – the latter option being ruled out by most

In the absence of specific regulations, EU officials are assessing whether existing rules governing financial instruments could apply, but have so far reached no conclusion

When asked whether Libra would need a license to operate in the bloc, a spokeswoman for the EU commission told Reuters: “With the publicly available information on Libra, it is currently not possible to say which exact EU rules would apply.”

“It is likely that the project will require some form of authorization in Europe, depending on its precise features,” she added

In Switzerland Libra is applying for a payment service license, although it could face rules that typically apply to banks, regulators in the non-EU Alpine state said on Wednesday

The EU-wide legal vacuum has paved the way for smaller states to fill it. Tiny Malta, which already hosts the bloc’s largest online gambling industry and a big finance sector, has devised its own framework to attract virtual currency operators

It is unclear whether Malta and other smaller EU states would agree with Le Maire’s tough stance on Libra and cryptocurrencies

Le Maire said the bloc should also work to cut the cost of international payments, which Libra promises to slash

However, a European plan to develop instant, cheaper payments has been slow to take off

Real-time payments have been possible in the euro zone since 2017, but only about half of the bloc’s banks have joined the scheme that underpins these transactions, and it is mostly used for domestic payments

Le Maire also said Europe should consider “a public digital currency” which could challenge Libra. He said he would discuss this issue with other ministers next month

Reporting by Francesco Guarascio; Editing by Kim Coghill and Jan Harvey