“Bitcoin was ineffective, but stablecoins pose a threat”

From the point of view of the Bank for International Settlements (BIS), bitcoin and other early cryptocurrencies “failed as a means of payment or preservation of capital.” But the bank sees a new threat from corporate stablecoins.

In an October report, BIS claims that asset-backed cryptocurrencies, or stablecoins, including Libra, pose a growing threat to monetary policy, financial stability, and competition. According to the document, the widely distributed stablecoins, which are called “global stablecoins” in the report, are able to attract an international audience and have a “significant negative impact” on the current economic system. The report also says:

“First-generation cryptocurrencies, for example, Bitcoin, are subject to volatility, limited in scalability, have complex user interfaces and problems in the field of management and regulation. Thus, crypto assets have become a highly speculative asset class for certain investors and those engaged in illegal activities rather than a means of making payments. ”

The classification of stablecoins will remain the main legal issue. The influence of stablecoins on existing money systems and bank transfers also remains to be studied, the authors of the document say. Although such cryptocurrencies may offer faster, cheaper and more affordable payments, they should be introduced “only if significant risks are eliminated”.

Read This Now: Marshall Islands digital currency to be based on Algorand

In addition to the report, the Swiss Financial Market Supervisory Agency (FINMA) approach to the Libra Association, which is the responsibility of the regulator in Geneva, is consistent with the G7 recommendations on stablecoins. FINMA recently stated that Libra emphasizes the need for international coordination and “proper prudential requirements” for all services offered by this payment system.

A report on stablecoins was prepared based on the results of the July G7 request, shortly after the announcement
Libra