The German Federal Parliament has claimed that cryptocurrencies like Bitcoin are “not real money”.
The statement on Monday was essentially a formal response to the growing international concern over the economic effects of Facebook’s Libra cryptocurrency after the government was questioned on the subject by the Free Democratic Party.
The government clarified the basic features of money as a means of payment, a store of value, and a unit of account. The statement also points to the fact that the volume of payments carried out using crypto is limited when compared to fiat currencies.
Is Europe against cryptocurrencies?
As reported by Coin Rivet last month, a number of EU member states such as Germany, France, and the UK have all hardened their stances against cryptocurrencies.
Some governments now seem as though they’re starting to fear the real power of cryptocurrencies, especially as a means to store value.
In addition, the topic of cryptocurrencies – mainly stablecoins – was addressed at this year’s G7 summit in France.
The G7 member states argued that due to their potentially large size and reach, stablecoins could also pose challenges to fair competition, financial stability, monetary policy, and – in an extreme scenario – the international monetary system.
These challenges stem in part from the fact that stablecoins could one day transform from a cross-border payment solution to assets with money-like features.
Are stablecoins facing harder regulation?
Last month, finance ministers in France declared that they will “block Facebook’s Libra project” as it poses a threat to monetary sovereignty.
Portugal’s finance minister Mourinho Félix also underlined his country’s aversion to the project in a recent interview, saying: “Portugal shares the concern of other European countries regarding Facebook’s cryptocurrency.”
Moreover, an influential British parliamentary committee wants to “probe” Facebook’s controversial Libra cryptocurrency project amid fears that the social media giant’s move into the financial sector will grant it too much power.
In particular, the UK parliament is concerned about Facebook’s ability to safeguard the personal financial details of billions of users after a string of controversial privacy scandals.
Ministers in Germany have also expressed concerns over how Libra may develop within the EU, given it would take power away from monetary and fiscal policies.
It’s not only Western countries that are up in arms about stablecoins either. Russia has claimed that it may ban Facebook and Telegram if the US decides to block the launch of Libra.
According to President Vladimir Putin’s special representative for IT, Dmitry Peskov, if Libra launches without sufficient control measures, “the likelihood of Facebook being blocked” will increase in Russia.
Will cryptocurrencies eventually be blocked?
At the moment, it is still too early to tell what will happen in the long term. From a historical perspective, crypto-enthusiasts should expect harder regulation and a firmer stance on the use of cryptocurrencies such as Bitcoin, or even stablecoins like Facebook’s Libra.
Only time will tell how governments in the EU will react to the wider adoption of crypto coins.