G7 ministers ready to embrace digital currencies as long as they are controlled by regulators

• G7 finance ministers reiterated the strong support for the need to regulate cryptocurrencies.
• German Finance Minister criticized Facebook’s stablecoin.
• The global regulators move towards CBDC launch.

A sustainable rally of Bitcoin and other major digital currencies has not escaped the notice of global regulators. The G7 Finance Ministers renewed their calls to develop a comprehensive framework for cryptocurrency regulation. They confirmed that all countries support the need to regulate digital assets on a global scale, according to the statement published on Monday, December 7, following the officials’ virtual meeting.

The regulators believe that digital payments can improve the financial inclusiveness and reduce costs and inefficiencies of the existing payment systems. However, the process should be totally regulated and controlled by the relevant authorities. 

A wolf in sheep’s clothing 

The strong position is illustrated by the comments from German Finance Minister Olaf Scholz, who emphasized concerns about authorizing Facebook’s cryptocurrency in Europe. 

A wolf in sheep’s clothing is still a wolf. It is clear to me that Germany and Europe cannot and will not accept its entry into the market while the regulatory risks are not adequately addressed. We must do everything possible to make sure the currency monopoly remains in the hands of states, he said in the interview with Reuters after the meeting.

As FXStreet previously reported, Facebook’s coin may be launched as early as January 2021. The project radically changed the initial concept of the stablecoin. It renamed it from Libra to Diem in an attempt to escape regulatory criticism and distance itself from the social media giant. 

However, the European officials seem to be unimpressed by the efforts. At this stage, they still have many questions about the project, including data security issues and potential threats to sovereignty.

CBDC is above suspicions

Notably, the G7 financial authorities do not have similar negative feelings about cryptocurrency projects developed by central banks. In other words, the largest global economies are ready to give the green light to a cryptocurrency, provided that it is backstopped by a central bank.

A similar approach was recently voiced by the Russian central banker, Elvira Nabiullina. The Russian financial authorities admit the benefits of the central bank-issued digital currencies (CBDC) but oppose bitcoins and other digital assets out of the regulatory reach. Moreover, Russian legislators proposed a bill with a blanket ban on using cryptocurrencies as a means of payment.

The People’s Bank of China is moving fast towards the launch of digital yuan. The regulator announced the second live testing of the coin in the city of Suzhou. At the same time, the authorities continue their crackdown on the private cryptocurrency sector. Several China-based cryptocurrency exchanges had their top executives detained by the police/ Some of them, including OKEx, were forced to freeze crypto assets withdrawal.