Facebook’s Diem stablecoin, who recently changed his name from Libra, still fails to impress German regulators.
As reported Reuters, German Finance Minister Olaf Scholz voiced his criticism of the project on Monday after a conference between G-7 finance ministers and central bank directors.
Scholz called the Facebook project “ a wolf in sheep’s clothing, ” insisting that changing the name wouldn’t change its foundations. According to him, Facebook and the Diem Association have not adequately addressed regulatory risks. Until that has happened, the German government will “not accept its entry into the market.”
Before Libra renamed herself, she already had the ambition of his plans reduced in an effort to appease regulators. While it still plans to eventually create a new currency tied to a basket of assets, it would be a fully approved stablecoin that should allow for easier regulation. Diem’s first release, it is reportedly coming in January 2021, will reportedly be a simple US dollar-based stablecoin.
G-7 leaders made that clear earlier they would be against the project until it fully complied with legal, regulatory and supervisory requirements. The declarations do not specify which requirements must be met.
Scholz’s comments seem to suggest that this is a matter of principle. “We must do everything possible to ensure that the currency monopoly remains in the hands of states,” he said at the conference.
It appears that Diem’s refusal to drop his plans to create a separate currency – even if backed by the G-7’s fiat currencies – will continue to create regulatory headwinds for the project.