G7 Countries call for swift regulation of Cryptocurrencies
The World’s top financial leaders have called for the swift and comprehensive regulation of cryptocurrencies following the turmoil that has seen the demise of the Terra stablecoin last week.
They made the call in a draft communique shown on Thursday.
“In light of the recent turmoil in the crypto-asset market, the G7 urges the Financial Stability Board, FSB, to advance the swift development and implementation of consistent and comprehensive regulation,” Finance Ministers and Central bankers from the Group of Seven industrialised nations said in the document.
They were meeting in Koenigswinter, near Bonn (Germany), on Thursday and Friday.
Meanwhile the Cryptocurrency industry is scrambling to respond to U.S. lawmakers’ concerns about stablecoins following the collapse of TerraUSD, which wiped billions off the cryptocurrency market.
The Blockchain Association and the Chamber of Digital Commerce, which represent some of the most influential crypto companies, say they ”have been fielding a flurry of questions from Capitol Hill since TerraUSD, known as “UST,” broke its peg last week and crashed 90%.”
Stablecoins are cryptocurrencies that try to maintain a constant exchange rate with fiat currencies. The $163 billion space is dominated by tokens that are pegged to the U.S. dollar, like Tether and USD Coin, by holding reserves in traditional dollar assets. Some stablecoins, like UST, however, use a complex algorithmic process to create the peg.
Capitol Hill lawmakers have been quizzing lobbyists on the structure of UST, seeking to determine whether its collapse was preventable and if other stablecoins could suffer the same fate.
Lobbyists are urging lawmakers not to crack down too hard on the gamut of stablecoins.
Executive Director of the Blockchain Association, Kristin Smith said; “The one thing we’ve been cautioning to the Hill is that we don’t want to accidentally throw the baby out with the bathwater, because stablecoins we think are a really critical piece of the crypto ecosystem going forward.”
As the cryptocurrency market has exploded, reaching $3 trillion in November, the scrutiny of policymakers has increased.
Reuters/ Mercy Chukwudiebere
