BIS And G7 Report: Bitcoin Has Failed As A Store Of Value; But Stablecoins Are A Global Threat
The commission of the seven wealthiest nations across the globe, G7, released a 37-page report on the impact of stable coins on the global financial industry. The commission led by Finance ministers and central bank governors is looking to establish clear regulations and address risks and challenges related to global stable coins such as Facebook’s Libra.
G7 Report Calls for Strict Crypto Regulations
In the official report, the commission is stern on regulating stable coins given the risks at hand on the monetary and financial systems across the globe. It states that:
“no global stable coin project should begin operation until the legal, regulatory and oversight challenges and risks outlined above are adequately addressed, through appropriate designs and by adhering to regulation that is clear and proportionate to the risks.”
Furthermore, the commission suggests a unique approval process for each global stable coin and the development of flexible laws that adapt to the developments happening in the industry.
Stablecoins Presents a New Challenge
The commission’s task force on the report further highlights that stable coins, unlike other cryptocurrencies, may present a challenge to stable monetary policies and cause adverse effects on the global financial system. Echoing the ministers of finance from France and Germany, the report further cautions stable coins as a channel that toughens the “efforts to combat money laundering and terrorist financing”.
Despite the commission acknowledging the positive impact of stablecoins on the overall global trade systems which will simplify payments channels across borders, the report states the launch and global adoption of Libra will cause financial instabilities across global economies. Also pointing out:
“The first wave of cryptoassets, 1 of which Bitcoin is the best known, have so far failed to provide a reliable and attractive means of payment or store of value.”
G7 Regulating Crypto Payments
This, however, is not the first time the commission is focusing on crypto or Libra. In June, France’s Finance minister and President of G7, Bruno Le Maire, called for the regulation of cryptocurrencies globally. He specifically pointed out Libra’s launch as a potential threat to monetary systems across the world. He added at the time,
“We cannot accept private companies issuing their own currencies without democratic control.”