Germany Passes Bill to Block Parallel Currency

Germany approved a comprehensive blockchain strategy to ban the creation of stablecoins or other assets that work as parallel currencies.

Germany approved its new blockchain strategy, with a focus on banning the creation of digital assets to compete with the official currency, reported Reuters. But the wording of the bill states that no “company” can issue a parallel currency.

This formulation may mean Germany has already set the stage for curbing the efforts of Facebook to launch Libra and gain influence that will rival state-issued cash. Currently, most digital coins are based on voluntary efforts, and many do not have a corporation at their helm. Bitcoin, the oldest network, is completely decentralized.

“We want to be at the forefront and further strengthen Germany as a leading technology location,” said the German Finance Minister Olaf Scholz. “At the same time, we must protect consumers and state sovereignty,” Scholz said. “A core element of state sovereignty is the issuing of a currency, we will not leave this task to private companies.”

The words of the Finance Minister mimic those of French Finance Minister Bruno LeMaire, who also stated Libra was a potential threat to sovereign currencies. At the same time, Libra’s director, David Marcus, has stated the project will not aim at competing with traditional cash.

Both France and Germany are in the Eurozone, a unified economic area with a vast economy. It is still not clear how impactful would Libra be, even with the vast user base of Facebook. So far, the value of digital assets is small in proportion to the size of fiat-based economies.

The new German bill is also careful about allowing stablecoins to become alternative currencies. Stablecoins may be offering less restrictions in moving funds worldwide, thus circumventing some of the mechanisms to control for terrorism and crime financing. But still, most of the attention was pointed at Libra, and not at other already issued stablecoins like Tether (USDT), USDC, TrueUSD (TUSD) and Paxos Standard (PAX).

Germany is still one of the most crypto-friendly countries, recognizing Bitcoin (BTC) as an asset, but not as currency. The country also allows the tokenization of traditional assets, and some of the biggest security token offerings (STO) have targeted German investors.