The ECB has requested the European Union lawmakers to control stablecoins issuance within the region to the bank. Reuters reported that European Central Bank requested exclusive rights to decide the future of Stablecoins under its authority. This request was issued in a legal memo on 19th February.
The ECB believes that if stablecoins are not regulated, it can hurt the eurozone’s current payment system.
It is stated in the legal memo that when an asset reference is similar to a payment system, it may get exposed to potential threats. To make this payment method smoother, it should come under the supervision of the ECB.
ECB is not the first one to ask for making strict regulations for stablecoin. In the year 2020, the prime ministers of Germany, France, Italy, Spain and the Netherlands were also looking to create rules.
They asked European Commission to make regulations for stablecoin in order to protect fiat supremacy from the private coin providers.
They also asked to ban such coin providers who fall below a certain criterion within the European region. The minister’s proposal to bring all stablecoins back to the ratio of 1:1 and the euro will be held under an approved institution.
Facebook Diem Project a New Worry for Regulators
The latest statements from the ECB have not affected the stablecoin at all. But the majority of the stakeholders believe that the new wave of regulations is because of the Libra project of Facebook, which is now named Diem.
The Libra association was planning to launch its stablecoin in June 2020. But it faced many challenges in terms of regulation, especially in the EU. Many finance ministers were against the launch of Facebook’s coin.
After that, they replanned their roadmap and changed the brand name to Diem. Even after these changes, the regulators are still not in favor of its launch. They are against this Facebook project because it can reach 3 billion people in one go. If they launch their coin, the whole industry will face a massive change.