Abstract
Governments, regulatory authorities and standard-setting bodies started acting on global stablecoins triggered by the Libra announcement. Among the concerns expressed by the G7 and the G20 are risks to the stability of the financial system. The Financial Stability Board and the Financial Action Task Force have worked on regulatory issues and anti-money laundering ahead of the G20 summit in November 2020. Overall the Libra project has raised many questions on the regulatory front. Facebook had to revise the concept as Libra 2.0 and resubmit it for approval in April 2020. The European Commission announced a new regulation on Markets in Crypto-assets (MiCA) including stablecoins in September 2020 as part of a new Digital Finance Package. This opens the next chapter in a regulatory cat and mouse game.
Highlights
Governments, regulatory authorities and standard-setting bodies started acting on global stablecoins triggered by the Libra announcement
The internet services provided by the Facebook group have a global reach of almost 3 billion users, alone 2.4 billion via Facebook
Regulators and central banks at the international level have been concerned by the potential impact on investor protection, financial stability and market integrity (European Securities and Markets Authority, 2019, 33)
Summary
Governments, regulatory authorities and standard-setting bodies started acting on global stablecoins triggered by the Libra announcement. The European Commission announced a new regulation on Markets in Crypto-assets (MiCA) including stablecoins in September 2020 as part of a new Digital Finance Package. This opens the chapter in a regulatory cat and mouse game. These are backed by other crypto-assets, with or without an issuer, and have decentralised responsibilities such as the Single Collateral DAI. These are backed by users’ expectations about the future purchasing power of their holding; they do not have an issuer but do have decentralised responsibilities, for example NuBits (ECB Crypto-Assets Task Force, 2020, 7)
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