Facebook’s plans to roll out its Libra cryptocurrency faced a new challenge on Thursday when the Group of Seven wealthy nations stated such “stablecoins” shouldn’t be allowed to launch until the deep international risks they pose are addressed.
When launched fullscale, stablecoins – digital currencies usually backed by traditional cash and other property – could threaten the world’s monetary system and monetary stability, a G7 working group said in a report to finance ministers met in Washington for the IMF and World Bank fall meetings.
The emerging technology, which is now unregulated, like other cryptocurrencies, might additionally hinder cross-border efforts to fight money laundering and terror financing, and pile up issues for cybersecurity, taxation, and privateness, the report stated.
The report highlights concern among global lawmakers about stablecoins, including Libra, and presents a further pain for Facebook’s project after a chastening week.
In response, the Libra Association that supports the cryptocurrency effort said it was dedicated to working with legislators.
Libra was designed to respect national integrity over monetary policy, in addition to guidelines against money laundering and other efforts to cease illicit finances, it mentioned in a statement.
Amid sharp regulatory scrutiny, the 21 companies financing Libra vowed on Monday to forge ahead with the project, neglecting the defection of a quarter of its original members, together with payments titans Visa and Mastercard, this month.
Stablecoins aim to beat the extreme risk that plagues cryptocurrencies and makes them impractical for business and payments.