• Wed. Jun 22nd, 2022

G7 Countries Demand Quick Digital Currency Regulation After Terra Token Collapse

ByHazel R. Lang

May 23, 2022

The Group of Seven (G7) intergovernmental policy forum was the latest global body to stress the need for digital currency regulation. Senior financial industry officials from the seven countries have implored the Financial Stability Board (FSB) to quickly establish digital currency regulations.

According to a Reuters report, ministers and central bankers from the seven major industrial nations made the call at a meeting in Germany this week. The concern is raised in light of the collapse of the Terra blockchain tokens which has caused turbulence in the market.

“In light of the recent turmoil in the crypto-asset market, the G7 urges the FSB (Financial Stability Board)…to advance the rapid development and implementation of consistent and comprehensive regulation,” a draft reads. statement of the meeting.

The G7 includes Germany, Japan, the United States, the United Kingdom, Canada, France and Italy. Individually, several of these countries, including the United States and France, issued warnings about the risks posed by digital currencies, highlighting the unpegged stablecoin Terra USD (UST).

In the United States, Treasury Secretary Janet Yellen said the crash was a highlight explaining why regulations are needed for the rapidly growing industry. Since May 8, when the UST selloff began to stir up panic, the digital currency market has lost $302.1 billion in value, according to CoinMarketCap.

the The FSB is already working on a regulatory framework

The FSB, an international organization that monitors and makes recommendations for the global financial system, has examined the digital currency market. In a February report, the body warned that digital currencies, especially stablecoins, could potentially derail global financial stability.

The report highlights the scale, structural vulnerabilities and growing “interconnectedness” with traditional financial systems as key reasons for their concerns about digital assets. The BRI-funded body recommended that regulations be made to curb the sector.

“Crypto-asset markets are evolving rapidly and could reach a point where they pose a threat to global financial stability due to their scale, structural vulnerabilities and growing interconnectedness with the traditional financial system,” the report said.

While it feels concerned about digital currencies, the G7 has also pushed for the adoption of central bank digital currencies (CBDCs). The seven countries reached a landmark agreement last year on how CBDCs should be structured.

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