Stablecoin news for Tuesday includes the Group of Seven (G7) standing against the launch of Facebook’s (NASDAQ:FB) Libra.
Libra is a stablecoin that Facebook is planning to release but may not be able to due to the opposition of the G7. The main reason behind this is the G7 wanting proper regulation around stablecoin before the launch.
So what exactly is stabelcoin? It’s a term that refers to a specific type of cryptocurrency. These are a digital form of currency much like bitcoin but differ in being less volatile. That’s due to their connection to already existing assets, such as gold or a fiat currency.
The G7, which is made up of Canada, France, Germany, Italy, Japan, the U.K. and the U.S., have several concerns about stablecoin and Libra. That includes the following.
- Possibility of undermining financial stability.
- Lack of proper consumer protections.
- Concerns about privacy.
- Issues with taxation.
- The threat of cybersecurity problems.
- Its possible use for money laundering.
- The financing of terrorist organizations.
- Stablecoin could also see use in proliferation financing.
- The G7 also worries about it compromising market integrity.
- It also has issues with the governance of the cryptocurrency.
- Finally, there are concerns it will undermine legal certainty.
A section of the G7’s draft against stablecoin read by Reuters is as follows.
“The G7 continues to maintain that no global stablecoin project should begin operation until it adequately addresses relevant legal, regulatory, and oversight requirements through appropriate design and by adhering to applicable standards.”
FB stock was largely unaffected by the stablecoin news as of Tuesday morning.
On the date of publication, William White did not have (either directly or indirectly) any positions in the securities mentioned in this article.