EU will introduce stricter rules for global stablecoin like Libra

The European Union is looking to make headway in rule-making for digital finance, starting with digital currencies. A member of the European Parliament disclosed that they are preparing to introduce a new cryptocurrency regime, which will bring stricter regulatory oversight for global stablecoins like Libra.

Europe prepares a new crypto regime

At the Digital Finance Outreach 2020, Valdis Dombrovskis opined that Europe should take the lead in making regulations for digital finance. Dombrovskis, who is the Vice-President of the European Commission, responsible for the Euro and Social Dialogue.

According to his statement, companies in Europe are leading the path in digital finance with the development of new technologies. Thus, now is the best time for Europe to become a global standard-setter by boosting its international presence.

Global stablecoins will face more strict oversight

Dombrovskis went on to emphasize that cryptocurrencies will be the first sector to regulate closely, especially global stablecoins like the Facebook-planned Libra. Security tokens are one other crypto that is regulated under European law; however, global stablecoins are not.

He further emphasized that global stablecoins will possibly undermine monetary and financial stability. 

Overall, our approach will be proportionate and relate to the level of risk. That means lighter rules for less risky projects,” Dombrovskis concluded. In the case of global stablecoins, such as Libra, “their potentially systemic role [means] our rules will be stronger.

Moving forward, Dombrovskis explained that legal uncertainty is often seen as a hindrance to the development of the crypto-asset market in Europe. However, he mentioned that the cryptocurrency regulatory regime will stimulate innovation while still covering unregulated cryptocurrencies. It will equally consolidate with existing regulation standards around the world.

Tron-based USDT exceeds 1.9 billion in circulation as the stablecoin trading volume spikes

As the US dollar-backed stablecoin, Tether (USDT) continues to see an increase in trading volume and more heavy printing, a relatively large portion of the stablecoin is being issued on the Tron network. Also, the Tron-based USDTs are now in full play, Justin Sun, the founder of Tron, disclosed this on Thursday.

Tron-based USDT whole supply in circulation

Sun shared on Twitter that the Tron-based USDT currently circulating has exceeded 1.9 billion. A glance at the Tronscan revealed that there is a total of 1,983,395,020 billion USDT in circulation. This is equal to the entire supply of Tether stablecoin issued on the network so far.

Probably, the data signals high demand for the Tron-based USDT. However, only 71,812 addresses are holding the entire Tron version of Tether stablecoin. One can quickly tell from a historical chart that the stablecoins issued on the Tron network has been increasing consistently when compared to its former home, the Omni Layer.

USDT on Tron kept growing

As of October last year, Tron-based USDT accounted for 12 percent of the whole supply of USDT across the different networks that house it. Earlier in January, the Tron network garnered a 10 percent increase of the total USDT supply, summing up to 916,550,610, which was 22 percent of total supply, at that time.

With massive printing of USDT, Tron sees more than double the amount it gained in January, all of which are circulating now, as per Tronscan. Meanwhile, there is currently a total supply of 1,335,000,000 USDT on the Omni Layer, while Ethereum-based USDT continues to lead the pace with 5,737,970,410 USDT total supply.

USDT trade volume continues spiking

Tether is believed to have become the most significant success story throughout the cryptocurrency industry. The USDT market cap of the stablecoin has grown to over $8.8 billion since the market crash on the 12th of March. The meltdown probably spiked more demand for the stablecoin, as the need for fiat-pegged crypto surged accordingly.

As reported by Messari, a digital currency research company, USDT, Bitcoin, and Ether alone make up 90 percent trading volume in the crypto market.

ECB to focus more on retail CBDCs, and not for business case, Mersch

The European Central Bank will focus more on the release of retail CBDCs than any other business aspect attached to it. Yves Mersch, one of the bank’s board members, revealed the development on Monday during the virtual Consensus 2020.

According to Mersch’s statement, the central bank’s plan to release a digital currency is originally not an effort to meet up with the latest trends. However, the bank said it is looking to launch a CBDC because they ought to be ready.

Retail CBDCs are a game-changer

Moving forward, the board member of ECB admitted that the bank does not see any “business case” with the release of its digital currency. Their primary focus is channeled towards retail CBDC, as a wholesale CBDC means that the digital currency will be limited to some financial counterparties. This will mean business, according to Mersch.

On the other hand, Mersch explained that retail CBDCs could be considered as a game-changer, given that such digital currency will be equally accessed by the entire public. Meanwhile, certain factors need to be addressed before the development of retail CBDCs.

ECB to still work on optimal CBDC

Among these things include the need to address the relationship of bank-issued digital currency, and the European coins as well as banknotes. There is also a need to state the currency’s legal tender status, including the process of converting one to the other.

To reduce the potential risk of bank digital currencies on the existing financial system, Mersch also mentioned an option of incentivizing non-banks in order to depend more on market-based alternatives, instead of relying on a bank deposit. This can be achieved by remunerating the digital currencies at a below-market rate. Another method is by adopting a tiered remuneration system

Mersch added:

The lack of a concrete’ business case’ for a CBDC (Central Bank Digital Currency) at present should and does not stop us from seriously exploring the optimal design of a CBDC so that we will be well prepared should we ever take (that) policy decision.