For all the controversy that surrounds cryptocurrency, stablecoins are a very mixed bag. For some, stablecoins are an easy option to invest in because they are tied to fiat currency and other traditional assets while for others, stablecoins as not being pure cryptocurrencies and do not bother with them. Stablecoins, however, has proved to be an interesting bridge between the world of cryptocurrency and the traditional financial markets as many private firms such as JP Morgan and Facebook have launched their own stablecoins and even those coins, which are supposed to be less controversial to introduce to the public, still face controversy.
According to October 13, 2019 reports by the BBC, the G7 group of nations consider cryptocurrency generally to be problematic but consider stablecoins to be a threat to the global financial system.
The Trouble With Stablecoins
The report also touched on the upcoming Lira token and stated that even if all the Libra association members are able to overcome all the current challenges facing the upcoming token, these token might not get the regulatory approval of the desire.
“The G7 believe that no stablecoin project should begin operation until the legal, regulatory and oversight challenges and risks are adequately addressed. […] Addressing such risks is not necessarily a guarantee of regulatory approval for a stablecoin arrangement,” the report says.
Stablecoins with the ability to scale rapidly was also touched on in the report and it was stated that they could not only could stifle potential competition but should consumers lose faith in the stablecoin, it could threaten the local economy. Still on the case of the Libra token, the Facebook team is still pushing hard to clear the regulatory pathway ahead of its launch and Mark Zuckerberg is due to testify in US Congress later this year and the lobbying team is still trying to assuage any fears about the token among world leaders.
This report, however, will be presented to finance ministers at an upcoming international monetary fund meeting and could influence opinions and decisions regarding cryptocurrencies and even Libra when released. Since the Libra token was announced, it has acted as a catalyst for which discussion on cryptocurrency regulation is been taken to the forefront of international politics and this, in turn, brings the future of cryptocurrency into question.