In light of Facebook's upcoming Libra coin, European Central Bank (ECB) Executive Board Member Benoit Coeure is reportedly urging financial regulators to create a viable framework for crypto projects.
According to Coeure in Southern France, where an economic conference is taking place, the growth of the crypto industry is exposing the flaws of the existing regulatory landscape as well as the "failure of the banking system to adopt new technology," Bloomberg reported. Coeure added:
"All these projects are a rather useful wake-up call for regulators and public authorities, as they encourage us to raise a number of questions and might make us improve the way we do things."
The ECB executive board member argued that it is "too dangerous" to allow tech giants like Facebook to "develop in a regulatory void for their financial service activities," adding:
“We have to move more quickly than we’ve been able to do up until now."
Europe to become crypto-friendly
Coeure's positive stance could be the first step for the European Union on becoming a crypto-friendly region.
CCN previously reported that IMF Managing Director Christine Lagarde was nominated to become the new head of the ECB. Lagarde has been known for her positive statements on crypto, stating once that digital currencies will cause "massive disruptions."
— The Gringe (@Roj6836) July 4, 2019
Being pro-cryptocurrency, Lagarde argued that regulations around the crypto industry are inevitable. However, regulators have to keep an open-mind when building such frameworks.
"Policymakers should keep an open mind and work toward an even-handed regulatory framework that minimizes risks while allowing the creative process to bear fruit,” she said.
According to Lagarde – similarly to the dot-com companies that survived that crash – the cryptocurrencies that stay with us will have a substantial impact on the financial system.
Libra puts regulators under pressure
Prior to Libra's expected launch in 2020, regulators around the world are experiencing high pressure to create a framework around cryptocurrencies to lower the potential dangers of the tech giant's ambitious project.
Due to the regulatory pressure, the Internal Revenue Service (IRS) is expected to update its 2014 guidance on digital currencies, The Wall Street Journal reported.
According to the report, a bipartisan group of 20 lawmakers urged the IRS to change its terms to solve the gloomy legal issues surrounding the U.S. crypto industry.
Lawmakers are considering at least three bills to provide regulatory clarity for cryptocurrencies that would potentially result in the growth of the sector in the U.S.
On Wednesday, Congress members demanded Facebook to "immediately cease" its work on Libra until lawmakers and regulators have analyzed the risks and the benefits of the company's upcoming cryptocurrency.
The House Financial Services Committee has a hearing scheduled on July 17 on Libra, and Facebook has already announced that the company is willing to work with Congress.