Joint statement by five EU finance ministers: Stablecoins should not operate without regulation

Germany, France, Italy, Spain, and the Netherlands jointly urged in the European Parliament for strict regulation of stablecoins backed by physical assets to protect consumers and national sovereignty in monetary policies.

The finance ministers of these five countries issued a joint statement yesterday (12), stating that stablecoins should not operate within the 27 EU member states without regulation.

Libra Draws Attention

While stablecoins have been around for years, what truly caught the attention of international regulatory bodies was Facebook's "Libra cross-border digital currency project" that began last year. Many countries have started to worry about its impact on their monetary policies and financial stability, leading to skepticism and opposition. Ultimately, under immense international pressure, Facebook shifted Libra from an open system to a highly regulated and closed system. Its payment system license is still under review by the Swiss Financial Market Supervisory Authority.

USDT Continues to Expand

Pegged 1:1 to the US dollar, Tether (USDT) remains the largest market-cap stablecoin, despite facing continuous scrutiny. Initially claimed to be backed 100% by the US dollar, it was later revealed to also hold bonds and other valuable assets as support. Currently, USDT has become so widely used in the cryptocurrency community that it has become indispensable, with significant usage on the Ethereum network. Tether (USDT) now has a market cap of $14 billion and operates across eight public blockchains.

In addition, there are other stablecoins backed by various assets (as shown below). These stablecoins, which pose a direct threat to financial regulations and anti-money laundering measures in payment and remittance applications, are also gaining increasing attention.

Bank of England Governor Optimistic: Complementarity of CBDC and Stablecoins

However, not all financial regulatory institutions are wary of stablecoins. It was reported that the Governor of the Bank of England, Andrew Bailey, stated in a speech, "Stablecoins and CBDCs are not necessarily mutually exclusive. If designed properly, they can coexist, serving as different payment methods and integrating with stablecoin ecosystems such as wallets to provide consumers with access to CBDCs. In future payments, private organizations and public sectors may work together towards this direction."