For months now, Libra, the stablecoin project from Facebook, has been mired in one controversy or the other. However, a new report could throw the asset’s future operation into further disarray.
On November 4, popular news medium Reuters reported that the International Organization of Securities Commissions (IOSCO), a global securities and futures trading regulator, is mulling over the prospect of adding stablecoins into existing securities policies.
Minimizing Risks by Enforcing Securities Laws
Citing a report from Chairperson Ashley Alder, Reuters reports that the agency has come to recognize the benefits that stablecoins could bring, while not being oblivious of their potential risks. In a statement, Alder reportedly argues that after thorough analysis, the regulator has found that stablecoins possess certain features of typical securities. So, to provide clarity on their operation, imposing securities laws that govern operational aspects such as disclosures, registration, and reporting might be the best way forward.
Facebook has brought on much scrutiny for stablecoins. While many of these assets have been operating unencumbered (or at the very least, with the same level of non-interference as other crypto assets), Facebook’s Libra could end up being more of a curse than a blessing.
This heightened level of scrutiny doesn’t mean that stablecoins are fundamentally flawed. The principle of tying the value of an asset to a fiat currency or a nation’s resources is logical, as it solves the issue of volatility—one argument that’s plagued Bitcoin for so long.
Rather, the problem is with Libra. Countries (or economic blocks, even) are skeptical about allowing the asset to operate in their jurisdiction, and they haven’t shied away from making their displeasure known, as BeInCrypto has previously touched on.
Now, most regulators and policymakers who prefer to lash out at Libra do so by stating their disapproval of “stablecoins” in general. It seems as though this way, they don’t seem like they’re against the asset in particular.
The Libra Barrage Continues
The prospect of being subjected to securities laws could undermine Libra, but considering the successive waves of attacks that the asset has endured since the very day it was launched, this isn’t new territory. Back at home, the stablecoin has been grilled left and right, with three Congressional testimonies and a boatload of scrutiny leaving the asset’s hope for a launch hanging by a thread.
Besides that, certain governments have also given subtle indications that they won’t allow the asset to launch within their borders. While some countries have been subtle in their approach to keeping Libra at arm’s length, others have made their disdain for the stablecoin known. Last month, Olaf Schulz, the Finance Minister and Deputy Chancellor of the country, argued that Libra should be prevented. Before that, he urged the German government to kick against the adoption of all “parallel currencies.”
Images courtesy of Shutterstock.
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