A report drafted by the G7 group of nations identifies stable coins as a risk to the worldwide financial system. The G7 draft report underlined the major risks associated with cryptos.
It also stated that even if corporate members of the governing Libra Association tackled regulatory worries, regulators will not approve it. In this regard, G7 has issued the following statement:
“The G7 believe that no stablecoin project should begin operation until the legal, regulatory and oversight challenges and risks are adequately addressed. […] Addressing such risks is not necessarily a guarantee of regulatory approval for a stablecoin arrangement.”
The G7 points out that global stable coins have the ability to ramp up quickly, end competition and put financial stability at risk if users run out of trust in the coin.
The report will be sent this week to finance ministers during the annual meeting of the International Monetary Fund. Even though the report does not pick on Facebook’s Libra stablecoin venture, it could signify additional problem for the already plagued payment platform being planned for launch.
Regulators across the world are closely studying the endeavor. In this regard, the Bank of England recently established guidelines to be followed before disbursing in the UK.
Mark Zuckerberg, CEO of Facebook, is expected to testify before the US House of Representatives Financial Services Committee about Libra at the end of this month. Democratic Representative Maxine Waters, head of the Committee, is a well-known skeptic of the venture. Earlier in 2019, the Committee prepared the draft of “Keep Big Tech out of Finance Act.”
Several large enterprises have withdrawn from the Libra project. Major payment service provider PayPal was the first one to withdraw from the project. It was followed by Visa, Stripe, MasterCard and eBay.
Additionally, Finco Services of Delaware has filed a case against Facebook, citing trademark breach, undue contest and “false designation of origin” regarding the utilization of the Libra logo. The plaintiff is also filing case on its ex-designer, who created the logo job for Facebook, for using the design again.
