A new report by the G7 member countries has taken a hardline stance against Facebook Libra as they saw such digital currencies posing risks to the global financial system. According to a BBC report, the G7 has said that Facebook’s Libra project must not go ahead until the firm proves it is safe and secure. The report comes just days after leading tech companies pulled out of the Facebook Libra Association.
In fact, the draft report took a negative stand on stablecoins. The report says, “The G7 believe that no stablecoin project should begin operation until the legal, regulatory and oversight challenges and risks are adequately addressed.”
The G7 had created a task force on stablecoin projects after the announcement of Facebook’s cryptocurrency project. The report will be shared with the Finance Ministers at the IMF annual meetings later this week. The report even states the JPMorgan’s stablecoin, JPM Coin, may also be examined by regulators.
The Financial Stability Board (FSB), in a separate report, warned that the introduction of global stablecoins poses a host of regulatory challenges. FSB chairman Randal Quarles stated that the challenges “should be assessed and addressed as a matter of priority”. The FSB is working with global regulators to identify potential regulatory gaps and will publish a report next summer.
In fact, US lawmakers have even called on other technology companies to exit the Libra project. Brian Armstrong, CEO of Coinbase, reacted to these developments on Twitter and said, “Something feels very un-american about this. Two senators writing to Visa, Mastercard, and Stripe to ask them to withdraw from Libra.”
Gabor Gurbacks, Digital Asset Strategist at VanEck, shared a copy of the letter sent by the regulators to these tech companies. You can access the letter here.
These new developments may greatly impact the agenda of the first official meeting of Libra Association members which is set to take place in Geneva later today.