G7 nations Group has recently published a report drafted by the G7 taskforce stating that the global cryptocurrency stablecoins are a possible threat to the global financial system. The drafted report came out yesterday and it is drafted by officials with the senior ranking from the International Monetary Fund (IMF), Central Banks, and Financial Stability Board (FSB). The report focuses on the different threats related to virtual currencies. The statement came from the Financial Stability Board’s chair Randal Quarles that they are drafting a report.
A letter about the same was also circulated among the finance ministers of G20 and Governors of Central Banks. The report pointed out Facebook’s stablecoin Libra as a possible major risk for the global financial systems and also pointed out the threats from other stablecoins. It is also made clear in the report that even if the Libra Association and its governing members report to regulatory concerns, still it is not possible that they will get approval from the key regulators. Even some of the important members of the Libra Associations has left the project, firms like PayPal, Mastercard, Visa, and Stripe.
The statement in the report,
“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.”
On the other hand, previously the leaders of G7 accepted the fact the cryptocurrency doesn’t threated the global financial stability, however, the letter states that the multinational stablecoin could be threatening to the regulatory system. The important concerns related to stablecoin listed in the report are the amenability of AML/CFT and KYC, security, and privacy of the customer’s data, dodging of tax, the integrity of the market and equal competition. However, the letter doesn’t mention any specific stablecoin, but the letter discusses concerns related to Facebook’s stablecoin Libra.
The Financial Stability Board will hand off an official note to the Finance Ministers of G20 and Governors of Central Banks on multinational stablecoins to the October 2019 in this week’s meeting. Quarles said,
“The G7 working group will be handing off work on regulatory issues to the FSB, and we have already begun work in this area.” Recently, the G20 leaders ask for an advice of FSB on the additional multinational responses as required on the given current growths of the stabelcoins in the market.