European Union leaders warned digital currencies such as Facebook’s under-fire Libra project would be unable to operate in the economic area until the risks associated with the payment method had been fully scrutinised by regulators.
In a joint statement the European Commission and European Council said no global arrangements of the currencies, known as stablecoins, should begin until “legal, regulatory and oversight challenges and risks have been adequately identified and addressed”.
It conceded although the currencies may provide cheap and fast cross-border payments “these arrangements pose multifaceted challenges and risks related, for example to consumer protection, privacy, taxation, cybersecurity and operational resilience, money laundering, terrorism financing, market integrity, governance and legal certainty”.
The Libra currency forms the base for mobile wallet project Calibra and is overseen by the Libra Association. Since the project was formally unveiled in June the viability of it, and other similar coin projects, have been questioned by a number of authorities across the world.
Following negative headlines and political pressure in several countries in October, a number of high profile backers including Mastercard and Visa withdrew their support.