The Council of the EU and the European Commission have published a joint statement on stablecoins. As expected this states that no global “stablecoin” arrangement should operate in the EU until “the legal, regulatory and oversight challenges and risks have been adequately identified and addressed.” While the statement recognizes that “stablecoins” may present opportunities in terms of cheap and fast payments, for example, with cross-border payments, it lists a multitude of “challenges and risks”. These are consumer protection, privacy, taxation, cyber security and operational resilience, money laundering, terrorism financing, market integrity, governance and legal certainty. Having apparently therefore ruled out for the time being stablecoin initiatives, the Council and the Commission welcome the fact that EU central banks and regulators are looking at the costs and benefits of central bank digital currencies. They also flag up the key role of European “payment actors” in exploring further the ongoing digital transformation of the payment system to meet customer and market expectations.
Richard Powell is a knowledge lawyer within Baker McKenzie's global financial services regulatory group where he is responsible for supporting and developing the group's legal and technical knowledge. Previously he was a member of the UK Financial Conduct Authority's Enforcement Division where he advised on regulatory cases. He has also been an editor of Bloomberg Law's UK Financial Services Law Journal.