US economist Paul Krugman was one of many who predicted cryptocurrencies were a passing fad and would be another bubble that would soon burst like the dot.com boom in the early 2000s. But national and international players are now getting serious about regulation, mulling restrictions that could go to the heart of cryptocurrencies’ appeal.
France said this week it was establishing a Group of Seven Nations (G7) task force to look into how central banks can ensure cryptocurrencies adhere to money-laundering and consumer protection rules.
Digital currencies such as Facebook’s planned Libra raise serious concerns and must be regulated as tightly as possible to ensure they do not upset the world’s financial system, Group of Seven (G7) finance ministers and central bankers said on Thursday.
Finance minister Bruno Le Maire of France, which holds the rotating presidency of the G7 top world economies, told a news conference the group opposed the idea that companies could have the same privilege as nations in creating means of payment but without the control and obligations that go with it.
“We cannot accept private companies issuing their own currencies without democratic control,” Mr Le Maire said.
US Treasury Secretary Steven Mnuchin said: “They’re going to have to convince us of very high standards before they have access to the US financial system.” US Federal Reserve Chairman Jerome Powell, German Finance Minister Olaf Scholz and his French counterpart Bruno Le Maire have also spoken out against Libra.
Mark Carney, the Bank of England’s governor, said
“Issues such as money laundering, terrorist financing controls and data protection needed to be addressed before Facebook can be allowed to launch its digital coin. He said the central banks would need to have direct oversight.”
The government and the crypto sector are locked in an unnecessary all-or-nothing battle: Cryptocurrency will continue in its original, pristine form or it will be legislated beyond recognition