Although the fuss about Facebook’s proposed cryptocurrency, Libra, has been on the low, regulators around the world are still concerned about what a stablecoin of such magnitude could do to the global financial system.
To mitigate the uncertainty, the Group of 20 (G20) Financial Stability Board (FSB) has today established ten recommendations that would be used to regulate stablecoins, including Facebook’s Libra, in order to stop such projects from disrupting the world’s financial stability.
The G20 is an international forum for the governments and central bank governors from the European Union and 19 countries. The group believes that stablecoins should be subjected to such recommendations because they are used for global payments and cross-border settlements.
According to the report, the implementation of these recommendations may vary based on each location. However, the FSB indicated that the proposals had been designed to be flexible to enhance cross-border cooperation, thus ensuring compliance in all G20 jurisdictions.
“Relevant authorities should, where necessary, clarify regulatory powers and address potential gaps in their domestic frameworks to adequately address risks posed by global stablecoins,” the FSB added.
The FSB further urged stablecoin providers to adopt a more secure measure in developing such digital currencies to mitigate the chances of criminals using these cryptocurrencies in fraudulent activities such as money laundering, terrorist financing, among others.
Since Facebook unveiled its plans to launch its global digital currency, the project has been slammed with a series of backlash from global regulators, including the UN and the United States.
The backlashes stem from the fact that if the number of users on the popular social media platform adopts the Libra token, and the regulators believe it could spell doom for the global financial sector.
The continuous scrutiny led to the loss of significant partners of the project, including PayPal, Visa, Mastercard, Stripe, eBay, Mercado Pago, and Booking. However, the project got a boost this year with the E-commerce giant, Shopify addition to the Libra association.
Facebook has since been working round the clock to address regulatory concerns about the Libra token, as it unveiled plans to redesign the project to accept multiple currencies, including those issued by Central banks.