The European Central Bank (ECB) is planning to regulate all stablecoin's like Facebook's Diem in the euro zone to prevent the potential threat, Reuters reports, citing the watchdog's appeal to European Union lawmakers. The ECB wants to get veto power to fight inflation risks triggered by stablecoins or protect the safety of payments.
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"Where an asset-reference arrangement is tantamount to a payment system or scheme, the assessment of the potential threat to the conduct of monetary policy, and to the smooth operation of payment systems, should fall within the exclusive competence of the ECB," the ECB said.
According to the watchdog, issuers of stablecoins should be subject to the same "rigorous liquidity requirements" as to money market funds. The ECB notes stablecoin issuers should "at a minimum grant end-users a direct claim on the issuer or on the reserve assets and redemption rights."
As iHodl earlier reported, iFinex Inc., a parent company of Bitfinex, and Tether will pay $18.5 million in penalties as the both companies made false statements about the backing of the tether stablecoin.
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