Staying abreast of cryptocurrency news around the world can be a challenging exercise. Sometimes it seems as though there is not anything noteworthy going on. Other times, the news comes so hot and heavy that you just cannot keep up. We appear to be in one of the latter cycles right now. Cryptocurrency is making headlines on just about every continent.
Europe has gotten a lot of attention in recent weeks thanks to the ongoing Libra saga and some of the political doings in France, Germany, and Turkey. Suffice to say that cryptocurrency in Europe is still a mixed bag. Until it all shakes out, the best we can do is pay attention to what people are saying and doing. That is the point of this post.
In the following paragraphs you will read about four recent news stories coming out of Europe. All show cryptocurrency in a slightly different light. Yet they all illustrate one central point: European leaders are trying to find their way in the crypto space. It is not pretty at times, but at least they are trying. With that, let's get to the news.
1. EU Looking at its own coin
The European Union establishing its own digital coin at some point in the future would be no surprise. It is no secret that the European Central Bank has been studying cryptocurrency for quite some time. What is surprising is a draft document recently issued by the EU suggesting that members of the bloc work on developing a common approach to cryptocurrency.
Among other things, the document offers two things that give us a clear idea of what European leaders are thinking. The first is a proposal to ban high risk cryptocurrency projects on European soil. Any such ban would be implemented to ostensibly protect consumers from losing their shirts. More importantly, they would protect the European Central Bank from competition it doesn't want.
This immediately raises concerns over Facebook and its Libra project. But there is no need to get ahead of ourselves. We will discuss Libra in a minute. Instead, let us move on to the second big suggestion in the EU document: a suggestion that the EU should consider issuing its own digital currency in the near future.
The document draft states, in part:
"The ECB and other EU central banks could usefully explore the opportunities as well as challenges of issuing central bank digital currencies including by considering concrete steps to this effect."
EU leaders will have time to study the proposals throughout November in anticipation of possible adoption in December 2019. Should adoption become reality, the EU could potentially have a cryptocurrency ready to go sometime in 2020.
2. EU Effort to stop Libra in Europe
Our second story is an offshoot from the first inasmuch as its origins are in the same draft document laying out proposals for a European crypto. Language in that document also declares the EU's intention to not allow Libra to gain a foothold in Europe. This is not just idle chatter. The EU has no intention of allowing Facebook to get involved in financial services anywhere within its jurisdiction.
European leaders have said through their document that Facebook should not be allowed to operate in the EU until all risks and challenges have been adequately addressed - which is a polite way of saying 'never'. The EU's big concern at this time appears to be a lack of transparency by Facebook and the Libra Association.
Adding fuel to the fire is a statement from Romanian Fiscal Council president Daniel Daianu, who made it clear in a recent interview that he has no fondness for Libra. He called Libra "very dangerous" and explained his belief that all markets - digital included - should be aggressively regulated in order to prevent a shadow banking sector from emerging.
Daianu is not alone in his thinking. We know from past new stories that French and German regulators share his views. Overall, they have no desire to allow private monetary systems to flourish separate from government and central bank control.
All indications suggest that Libra is dead on arrival in Europe. Unless something miraculous happens, it is unlikely that European regulators will budge on this one. And should the European Central Bank beat Facebook to the punch by issuing its own cryptocurrency first, Libra wouldn't have a prayer of being used in Europe.
3. Turkey testing its own crypto
Perhaps the most surprising of the four new stories detailed in this post comes out of Turkey. Apparently, Turkey has been testing a government-backed cryptocurrency for some time now. President Recep Erdogan stated recently that those tests should be completed by the end of 2020.
Erdogan has also directed that the country's central bank be ready to begin issuing a digital lira at about the same time testing wraps up. Between now and then, those working on the project have to come up with a software platform to facilitate instant digital payments that will complement, rather compete with, the current banking system.
The Scientific and Technical Research Council of Turkey will work alongside central bank officials to come up with a system that works well for everyone. If all goes as planned, having access to both physical and digital lira should help boost Turkey's economy by stimulating economic activity - at least that is the theory.
Turkey has something else up its cryptocurrency sleeve: a plan to develop blockchain technologies that could more fully integrate a digital lira into the country's national economy. It is believed that developers are working on blockchain projects addressing public transportation, public services and administration, and even customs.
All this points to a thoroughly integrated system that could, at some point in the future, lead to the abandonment of printed bills and minted coins. Consumers, businesses, and government agencies would no longer be dealing in cash. Everything would be done by way of digital tokens that can be moved freely in and out of a variety of networks to meet any number of needs.
It would appear as though Turkey is further along in their cryptocurrency and blockchain plans than originally thought. Will they be the first ones to launch a workable and viable central bank crypto? Stay tuned.
4. Regulator issues stablecoin guidance
The fourth and final story for this news roundup comes out of Madrid, which just happens to host the headquarters of the International Organization of Securities Commission (ISCO). As an international regulator, the IOSCO's primary mission is to regulate the world's securities and future markets. Members of the Commission hail from more than 100 countries. They regulate more than 95% of the world's securities.
So what has the ISCO done recently to make the news? They have issued some unofficial guidance via a statement on stablecoins. After a meeting in late October 2019 to discuss a number of pressing issues - including the possible rise of government-backed stablecoins - the commission felt it necessary to address the issue head-on.
Reports note the Commission's willingness to acknowledge the potential benefits of government-backed and private sector stablecoins. They acknowledge that stablecoins offer opportunities to both investors and consumers. They knowledge that stablecoin platforms could be active market participants in most jurisdictions.
However, the most noteworthy point made by the ISCO relates to how stablecoins should be regulated. According to the Commission, regulation of any particular coin must be determined by how that coin is structured. They say that the rights and obligations associated with a coin, combined with any continuing responsibilities to investors, determine whether said coin is actually a security or not.
The ISCO further maintains that stablecoins can be regulated as securities if they are structured a certain way. Unfortunately, this creates a potential open door for regulators to stick their noses into private sector monetary systems. It wouldn't take much for them to identify just one or two characteristics that they believe gives them the authority to regulate a stablecoin project.
Stablecoin developers have a tough road ahead of them. At some point, they are going to have to find a way to convince regulators that their projects are not primarily investments. They have to be able to establish that their platforms are payment systems similar to PayPal and Skrill. Otherwise, they might be regulated into oblivion by bureaucrats who cannot look beyond initial funding to see a stablecoin for what it really is.
Regulators are refocusing their vision
As you can see, there is a lot going on with cryptocurrency in Europe right now. All four stories detailed in this post show that regulators are refocusing their vision in all things crypto and blockchain. They have come to realize that blockchain technologies are here to stay. They have come to realize that if they do not get out ahead of the technology now, cryptocurrency and blockchain will weaken their ability to control economics through fiat and central bank policies.
Moving forward, cryptocurrency and blockchain projects should expect a lot more government push-back. Libra seems to have lit fire under the feet of regulatory agencies and central banks alike. And at least across Europe, action is being taken.