Facebook’s decision to step into the world of cryptocurrencies with its Libra stablecoin, grabbed the attention of regulators all over the globe. The company’s idea of reaching out to more than a quarter of the world’s population with its digital currency was too ambitious for the regulators, and the project has faced severe backlash in almost every jurisdiction.
The problems for Libra and other similar projects don’t seem to be coming to an end anytime soon as a recent Reuters report state that some of the world’s largest economies have said in a statement that they would oppose the launch of the stablecoin unless it is properly regulated.
According to the report, finance ministers and central bankers of the Group of Seven (G7) that include the United States, Canada, Japan, Germany, France, Italy, and the U.K noted that any global stablecoin project would be halted until an appropriate regulatory oversight is in place.
The draft raised various concerns regarding stablecoins like Libra, which if not regulated, could undermine financial stability, consumer protection, privacy, taxation, or cybersecurity.
Lack of supervision could also lead to these technologies being used in money laundering, terrorist and proliferation financing, could compromise market integrity, governance, and undermine legal certainty.
The Draft stated:
“The G7 continues to maintain that no global stablecoin project should begin operation until it adequately addresses relevant legal, regulatory, and oversight requirements through appropriate design and by adhering to applicable standards.”
The draft follows a meeting where the representatives of the seven nations assembled last year, to explore how central banks can ensure that digital currencies comply with anti-money laundering laws and other consumer protection rules.
A draft report from the G7 last year also outlined the various risks involved with cryptocurrencies and remarked that “global stablecoins” pose a threat to the existing financial system.
As a result, Facebook’s Libra seems to be in a tight spot and might not get approval from the regulators.
More regulators concerned about Libra
In a separate statement, the Financial Stability Board (FSB) has also voiced concerns regarding global stablecoins. The FSB noted it will take “appropriate actions” to make sure these digital currencies comply with all applicable regulatory standards.
In a report to the G20 finance ministers earlier this year, The FSB said:
“A widely adopted stablecoin with a potential reach and use across multiple jurisdictions could become systemically important.”
Being blocked by regulators isn’t anything new for Libra. As reported last year by The Daily Chain, the Reserve Bank of Australia (RBA) has quelled hopes of Facebook launching its digital currency in the nation earlier this year.
Last year, Five European Union member countries namely France Germany, Italy, Spain, and the Netherlands teamed up to prevent Libra from launching in Europe while also putting pressure on Facebook and other members of the Libra Foundation to put an end to the project.