This week, the world’s top policy makers, the G7, called for more urgency as financial regulators finalize comprehensive crypto regulation. Several crypto users suffered severe losses in the wake of Terra’s collapse, which occurred a week ago.
The G7 Contacts FSB to speed things up.
The dollar-pegged stablecoin lost its value when it couldn’t keep the dollar peg, tumbling to as little as $0.07. The twin token, LUNA, wasn’t far behind. The price drop was snowballing, as overall market anxiety caused even more stablecoins like DEI and USDX to go down. According to reports, the G7 responded with a letter to the Financial Stability Board (FSB) in response to these events.
The G7 is made up of the world’s major, most developed countries. The United States and the United Kingdom, Canada, France, Italy, Japan, Germany, and the European Union are among them.
The Financial Stability Board, often known as the FSB, is a multinational organization based in Basel, Switzerland, that rose to prominence after the 2008 global financial crisis. They wrote several economic policies and changes to help solve the problem. The Financial Services Board had previously committed to releasing a report on the regulatory framework for stablecoins by October.
The Group of Seven asked for laws that would cover stablecoins carefully and completely. They demanded for quicker progress within a previously established timetable, ahead of the company’s meeting in Germany. The members have scheduled their next meeting for June this year.
Concerns about Stablecoins Abroad
When the price of ‘Terra’ began to plummet, financial regulators around the world became alarmed. The LUNA Foundation Guard, for example, gave $750 million worth of BTC and an equal amount in UST to help restore confidence in the currency. The sale of the BTC by the foundation had an effect on the cryptocurrency market, causing it to decline even further.
By the end of this year, Treasury Secretary Jane Yellen recommended that the SEC regulate stablecoins. She was eventually forced to retract this statement, however she cited Terra as an illustration of the systematic risk of stablecoins.The views of the French Central Bank Governor Francois Villeroy de Galhau were also shared.
Villeroy has said that the name “stablecoin” was incorrect in Paris this week, claiming that the market lately tumultuous shows these cryptocurrencies to be “possibly very unstable.” The MiCA law was a start, according to the governor, but EU officials must work more efficiently on crypto asset regulation.