Germany’s cabinet has started a fierce attack on stablecoins. German finance minister said the country will clearly “reject” tokens such as Facebook’s upcoming Libra token, with Berlin hoping to push the rest of the world to follow that example.
This week is particularly crucial for crypto and blockchain enthusiasts in the country, as the cabinet continues to discuss its “comprehensive” blockchain policy strategy.
However, in a worrying development for thousands of blockchain enthusiasts, Reuters reported it had seen a document that was to be presented at Tuesday’s meeting that states:
“The Federal Government will work at European and international level to ensure that stablecoins will not become an alternative to official currencies.”
The same report has that Germany’s finance minister Olaf Scholz told a panel discussion in Berlin:
“We cannot accept a parallel currency. You have to reject that clearly,” referring to stablecoins such as Libra.
This past week, France Finance Minister Bruno Le Maire claimed that due to risks of financial sovereignty, systemic financial risks, and the potential for abuse of market dominance, we “cannot authorize the development of Libra on European soil.”
Elsewhere, Facebook’s head of Calibra wallet said earlier this week that
“Libra will be backed 1:1 by a basket of strong currencies. This means that for any unit of Libra to exist, there must be the equivalent value in its reserve. As such there’s no new money creation, which will strictly remain the province of sovereign Nations.”
However, it was reported that as the crypto industry grows one of the main selling points of stablecoins, the current absence of convenient fiat-crypto onramps could become endangered.
The Reuters document also included details of how the German government will co-operate closely with the central Bundesbank on a digital fiat project, “exploring the current state of developments and addressing possible risks.” In addition, the document highlights Berlin’s plans to legalize blockchain-powered electronic bonds.
However, Germany insists it remains committed to “digitizing” the nation’s economy. It is still largely expected that the country’s cabinet will agree to implement extra legislation on top of proposed regulations on local crypto wallet services.
Berlin is also looking into whether to ask the country’s financial regulator to watch cryptocurrency exchanges through a licensing system like is currently the case in nations like Japan.