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Bitcoin has failed as a means of payment or store of value: G7 report

Yogita Khatri

Cryptocurrencies, including bitcoin, have so far failed to provide a "reliable and attractive" means of payment or store of value, according to a report from the Group of Seven (G7) nations.

The group, consisting of France, the U.S., Japan, Canada, Italy, Germany, and the U.K. economies, published a final report on stablecoins on Thursday, recognizing that remittances are slow and expensive and that global stablecoins could solve some of these issues but they are not free from risks and challenges.

Cryptocurrencies are not a solution, said G7, as they are “highly volatile,” have scalability limits, complicated user interfaces, and issues in governance and regulation, among other challenges. “Thus, cryptoassets have served more as a highly speculative asset class for certain investors and those engaged in illicit activities rather than as a means to make payments,” per the group.

Stablecoins, on the other hand, have no established international classification, and may not actually be stable, according to the group. But as stablecoins “might be more readily usable” as a means of payment and store of value, issuers should ensure regulations are followed through.

“No global stablecoin project should begin operation until the legal, regulatory and oversight challenges and risks [...] are adequately addressed, through appropriate designs and by adhering to regulation that is clear and proportional,” said G7.

The Libra Association responded to G7 on the report, saying that Libra stablecoin will “operate with transparency and in partnership with regulators,” adding: “Libra is being designed to work with existing regulatory institutions and apply the protections they provide to the digital world -- not disrupt or undermine them.”

The G7 in its report further said that governments across the world should develop road maps for improving the efficiency and lowering the cost of payments and financial services. Further, “central banks, individually and collectively, will assess the relevance of issuing central bank digital currencies (CBDCs) in view of the costs and benefits in their respective jurisdictions,” said the group.