Calibra welcomes G7 attention

Calibra associate general John Muller believes a G7 working group report – which recommends close scrutiny of digital currencies’ cross-border impacts – could be considered a positive for the Libra Association.

“There’s still a challenge. One possible development is the increase in international coordination that is now coming… starting with the G7 which has now been handed over to the Financial Stability Board – so a broader list of countries and their financial institutions and central banks evaluating things,” he said, speaking at Money 2020 US in Las Vegas.

“There’s some hope that there will be more cooperation between more parties on a somewhat faster timescale.”

The report – published earlier this month by the Bank for International Settlements’ Committee on payments and market structures – suggested stablecoins such as Libra should not be allowed to launch until investigations into international risks the digital currencies could propagate be examined.

“Global stablecoins could have significant adverse effects, both domestically and internationally, on the transmission of monetary policy, as well as financial stability, in addition to cross-jurisdictional efforts to combat money laundering and terrorist financing,” reads the report. “Public authorities should apply a technology-neutral, functions-based regulatory approach, and should be mindful to forestall harmful regulatory arbitrage and to ensure a level playing field that encourages competition.”

However, J Dax Hansen, Perkins Coie, a law firm, believes regulators and the market are at odds.

“The way I interpreted the G7 report was ‘wait, private sector, you’re way ahead of us’ said Hansen, also on the panel. “Don’t launch a stable coin until we have regulatory certainty. But of course we’ve been waiting for decades for regulatory certainty, and we don’t have it, right?”

Hansen referred to a regulatory “face-off”, in which innovation continues to outpace rule- makers. In recent months a number of organisations who signed up to the Libra project have exited.

“We had some members of the central banking community send letters to some players in the payments space reminding them that there would be additional regulatory scrutiny on non-Libra businesses if they were to continue [with Libra],” said Hansen. “There’s really interesting dynamics happening where regulators don’t want bad things to happen on their watch… but progress is happening.”


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