Financial leaders of the G7 (the 7 largest world economies other than China), at a meeting held on October 13, 2020 in Brussels, opposed the launch of Facebook’s own stablecoin Libra. At least as long as it will comply with the recommendations regarding the regulation of cryptocurrencies in general.
Especially for this case, was even formulated a special document, prepared for the meeting of the finance ministers and heads of the central banks of the USA, Canada, Japan, Germany, France, Italy and the UK. According to it, digital payments can actually improve access to financial services, reduce transaction costs and increase network speed. However, at the same time, they need to be properly regulated to avoid a situation that undermines economic stability, interferes with the protection of consumer rights and the confidentiality of their private information, and also interferes with normal taxation and cybersecurity.
Alas, without proper control, stablecoins can serve (and are already quite actively used) in money laundering, to provide support for international terrorism, and even to finance the development of weapons of mass destruction. This clearly threatens the integrity of the international market, the effectiveness of its management and legal certainty.
So the position of the G7 is unambiguous - no large private stablecoin will start working until it meets the current legislative and legal norms and requirements.
We would like to remind that, unlike conventional cryptocurrencies, the value of stablecoins is directly related to some traditional currency or asset, and it is used both for making payments and for providing stored value.
The Financial Stability Board (FSB) under the G20 issued 10 recommendations back in April 2020 that define a global approach to the regulation and use of stablecoins. In particular - to Libra, which is going to launch Facebook - the world leader among social networks.
In addition, the text of the draft also mentioned that specialists under the G7 are also studying the risks and opportunities related to central bank digital currencies (CBDCs) - digital assets issued by central banks. And the head of the European Central Bank - Christine Lagarde - said that the organization is preparing to launch a full-fledged digital euro.
Also, representatives of the G7 expressed concern about the growing activity of ransomware. In their opinion, the global pandemic has seriously changed the economic activity on the Internet, so fraudsters also had to shift the focus of their activities.
“Such attacks, often followed by extortion through cryptocurrency payments, threaten the efficiency of the entire financial system, as well as public safety and economic growth. Therefore, it is necessary to fight this threat - both collectively and privately. "
The fact that even representatives of the world's largest economies are seriously considering issues related to cryptocurrencies and their regulation says a lot. At least - about recognition at the highest level. The question is whether it will be possible to strike a balance between the "independence" of cryptocurrencies, attracting the public to them, and the government regulation necessary to attract large capital and institutional investors. Simply put - won't the crypt cease to be so attractive for individuals if financial tycoons take it seriously? Unfortunately, there is no answer to this question yet. And the private experience of highly regulated tokens is not particularly useful here.
As for Libra specifically, it still has a chance. After all, it was not about terminating or banning the project, as it was with Telegram's own tokens, but about compliance with additional regulatory conditions. If Mark Zuckerberg's company makes the necessary changes, Libra will receive the green light at the highest level. And, perhaps, it will pave the way for other similar stablecoins. In any case, we need to see Facebook's reaction to the G7 statement to understand how events will go further.
Published on the EXBASE.IO based on materials from reuters.com