- Europe tightens its approach to private digital coins.
- The development can entail negative consequences to the market.
On Thursday, the finance ministers of the European Union (EU) agreed on a tough approach towards digital coins issued by private entities. The European financial leaders seemed to be anxious about the risks to the financial system emanating from private money, which is hardly the news.
No global stablecoin arrangement should begin operation in the European Union until the legal, regulatory and oversight challenges and risks have been adequately identified and addressed.
What’s interesting, they are still looking into the idea of state-supported digital assets and praised the European Central Bank’s decision to develop a public digital currency as an alternative to private initiatives.
The move can be regarded as clear evidence that the European regulators are not inclined to allow private money in any form circulating in the financial system. This approach echos the recent developments in Russia where the central bank supported a blanket ban on using cryptocurrencies as a means of payment.
The immediate market reaction was non-existent, in the long-run this development may increase the bearish sentiments in the industry and limit the recovery potential of major coins. While the regulators referred mainly to Facebook’s libra and other similar stable coin projects, the tough stance may have its toll on the broader market.
Thus, Bitcoin (BTC) has been moving below $8,000 since November 21. At the time of writing, the first digital coin is having a hard time at $7,350, which is considered as a pivotal level for the short-term price movements.