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G7: Libra must not go ahead until Facebook proves it safe and secure

Yogita Khatri

A draft report from the Group of Seven (G7) nations - France, the U.S., Japan, Canada, Italy, Germany and the U.K. - has said that no stablecoin project, including Facebook’s Libra, can go ahead until it is proven safe and secure.

"The G7 believe that no stablecoin project should begin operation until the legal, regulatory and oversight challenges and risks are adequately addressed,” said the group, according to a BBC report Monday.

"Addressing such risks is not necessarily a guarantee of regulatory approval for a stablecoin arrangement," the draft report added.

The G7 created a task force on stablecoin projects in June, when Libra was officially announced. The draft report, which will be presented to finance ministers at the International Monetary Fund annual meetings this week, further said that "global stablecoins" with the potential to "scale rapidly" pose a host of regulatory challenges. Notably, JPMorgan's dollar-backed stablecoin, JPM Coin, is also likely to be examined, per the BBC report.

The Financial Stability Board (FSB), which coordinates rules for the G20 nations, has also said that stablecoin projects pose a host of challenges to financial stability, compliance, investor protection, data privacy and protection, among others. These challenges "should be assessed and addressed as a matter of priority,” said Randal Quarles, chairman of the FSB, in a letter to G20 finance ministers, published Sunday.

This is the latest blow to Libra. Just last week, payments giants PayPal, Visa and Mastercard all pulled out of the stablecoin project, among other firms, citing regulatory uncertainty.