The future for stablecoins like Tether and USD Coin is looking a bit more grim as the criticism on Facebook’s Libra token could influence them as well. British news channel BBC claims that G7 countries may not give approval to Libra even if they manage to address all regulatory concerns. The news station bases its article on an unreleased report by a G7 taskforce.
The report outlines nine major risks posed by digital currencies, like Libra. Even though the report is mainly focused in Libra, it’s definitely also about other stablecoins. The draft report states that ‘cryptocurrencies such as Libra pose a risk to the global financial system’.
The report was made by a G7 taskforce. This group consists out of representatives from the International Monetary Fund (IMF), central banks, and the Financial Stability Board. The taskforce will present the report this week at an IMF meeting.
The G7 is made out of seven industrial countries; Canada, the United States, the United Kingdom, Japan, Italy, France and Germany. France and Germany have openly been criticizing the announcement of Libra. As a result they want the stablecoin to be banned and even consider their own digital euro.
Even though Libra is the one stablecoin getting all the media attention, there are more projects facing scrutiny. JP Morgan’s stablecoin JPM Coin is one of them, according to the BBC.
A bigger picture
The G7 is not alone in their criticism on stablecoins. The International Monetary Fund (IMF) already expressed their concerns this summer. They published a paper called ‘The Rise of Digital Money’ and stated that stablecoins have the power to overthrow traditional cash and the banking system.
Despite all the criticism in the G7 report, there’s also some good news. The taskforce acknowledges that cryptocurrencies can provide a faster and cheaper way to move money and make payments. They stated that the current system is often ‘slow, expensive and opaque’.
Even though there’s a lot of negativity surrounding stablecoins at the moment, the United States government has already approved several stablecoin projects. Last year Paxos Standard Dollar and Gemini USD launched with government approval.
Also published on Medium.