The meeting of finance ministers from the Group of Seven (G7) countries will end today. The officials are meeting for their annual discussions with digital currencies and taxation for tech companies like Google on top of their agenda.
Few days before the meeting started on July 17, the International Monetary Fund (IMF)released a report highlighting the global rise in digital money like AliPay, WeChat Pay, stablecoins, Facebook’s Libraetc. The Rise of Digital Money analyses how technology companies are stepping up competition to large banks and credit card companies hinting at their benefits and risks as well as regulatory issues associated with them.
The release comes after a recent statement by the US Treasury Secretary, Steve Mnuchin (also in the meeting) that his office has serious concerns that cryptocurrencies like Libra could be misused by money launderers and terrorist financers hence a national security issue. Mnuchin follows US President Donald Trump’s hit out at bitcoin and cryptocurrencies in general including Libra, tweeting he is not a fan.
“As the saying goes, ‘First they ignore you, then they laugh at you, then they fight you, then you win’, Trump’s criticism of Bitcoin and cryptocurrencies actually follows this saying very closely and it’s just a matter of time before it is more widely accepted,” says CoinGecko’s Bobby Ong, whose aggregator just released their quarterly review to show a growing crypto industry, via email. Ong does not see Trump’s lashing out at cryptos to have “a long lasting negative impact in the future”.
The CoinGecko Q2 report accounts that the crypto market capitalization increased by 125% in the last quarter while 302 exchanges (or 87% of all crypto exchanges tracked by CoinGecko) have been added in the last 18 months. It also points at a strong growth in Initial Exchange Offerings (IEOs) as the trend continues to grow peaking in April with 34 IEOs and $109.9 million raised in a single month. However, of the $262 million raised via IEOs so far in 2019, only 50% of them currently trade above IEO price by the end of June 2019.
For the co-founder of NEM Ventures, the venture capital arm of the NEM blockchain ecosystem, Dave Hodgson, Mr. Trump appears confused by what a currency is: a mechanism to represent and transfer value that two parties agree upon. He said:
“The USD is fundamentally backed by trust that his government will keep using the mechanism, preserve its value, and the population will keep producing goods to support that. In my opinion, fiat currency is arguably based more on thin air than crypto. There are plenty of cases of fiat disappearing into thin air when that trust doesn’t hold – as exemplified in the cases of Zimbabwe, Argentina, Venezuela and Lehman Brothers to name a few. Most fiat is already digital and the supply is controlled by national interests; with trillions of dollars magically created since 2008, presumably from the US government ‘thin air tanks'”.
Of the various issues to be discussed by the ministers including the slowing global growth, President Trump’s America-first trade policies, the tariff war with China and tensions with Europe, where the G-7 countries – Germany, France, Britain, Italy, Canada, Japan and the US – may find a common ground is in their mistrust for cryptocurrencies like Facebook’s Libra.
Hodgson adds that the Libra project, with its cross-border, cross-enterprise partnership, may be threatening to Mr. Trump as it represents private enterprise and, to a certain extent, citizens rejecting the model the US president holds dear “as one of the elite few who enjoys its privileges”. He believes Libra is “already having positive impacts by generating this type of debate at the national and international regulatory levels, and we have been asking for that for years.”
While Mnuchin said the meeting could end with a chairman’s report of the discussion rather than a final statement signed by all, France’s Bruno Le Maire hopes unity will win out over varying views related to “key challenges related to global warming, to the rise of new technologies, the new power of China…”