Economy

G7: digital currencies must be secure and safe

G7: digital currencies must be secure and safe”

EU's financial commissioner Valdis Dombrovskis is one of the main figures wanting to assess whether Libra should be regulated by the European Union if new regulation is required, or whether the stablecoin should be allowed to function, according to a recent article published by The Financial Times. Bertrand Perez, former senior director of payments engineering at PayPal was confirmed at the meeting as Libra's chief operating officer and managing director.

Visa, Stripe and Mastercard received letters earlier this month from Democratic U.S. Senators Sherrod Brown and Brian Schatz that urged the companies to "carefully consider" how they would manage potential risks associated with Libra before proceeding with the project.

As a result, Facebook is facing an intensive worldwide scrutiny of its cryptocurrecny project.

The association recently revealed that 1,500 companies are interested to become a part of the project, of which, only 180 met the requirements and standards of Facebook.

The report, which doesn't specifically name Libra, says that all backers of digital currencies must be legally sound, protect consumers, and make sure that their coins are not used for criminal activity.

Facebook's new sablecoin project is likely to kick off a new round of scrutiny and regulation in the cryptocurrency market. The report, due to be presented to finance ministers at International Monetary Fund's annual meeting this week, did not single out Libra but referred to "global stablecoins" with the potential to "scale rapidly" as posing a range of potential problems.

The Association's 21 remaining members include Facebook, Spotify, Uber and Lyft. "You know you're on to something when so much pressure builds up".

Furthermore, the source states that even if Libra's backers are mindful of the concerns the project may not be get a green signal from regulators.

Facebook could have to prove that its digital currency, Libra, is safe and secure, according to a draft report by the G7. All the Libra Association is reportedly trying to do is making the global financial system more accessible to those it previously overlooked. In my opinion, the companies in question would have withdrawn, for the same reason as PayPal: insufficient visibility on how Libra would actually comply with the compliance and associated reputational risk (such as previously highlighted), and potentially worse (impact on the relationship of these organizations with regulators, for example).

I would not like to strike the initiative for now, but the work of the Libra Association has become much more hard.

Good news certainly appears to be in short supply right now - and it will keep going this way until Facebook can provide answers on the transparency and regulatory front.



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