Facebook is facing new problems with its digital currency, Libra, as the company should not launch that currency until Facebook proves to be safe and secure, according to a report by the world's largest economies.
In a blow to the social media giant, the G7 report warned that cryptocurrencies like Libra pose a threat to the global financial system.
The draft report presents nine major risks posed by these cryptocurrencies, warning that even if Libra supporters address concerns, the project may not get regulatory approval.
The warning comes just days after Paypal, Mastercard, Visa, eBay and Stripe withdrew from the Libra project, citing regulatory uncertainty.
The G7 task force that prepared the report includes senior officials from central banks, the International Monetary Fund and the Financial Stability Board, which coordinates the laws of the G20 economies.
Supporters of cryptocurrencies such as Libra must be legal, protect consumers and ensure that currencies are not used for money laundering or terrorist financing, the task force says.
While the report, to be presented to finance ministers at the IMF's annual meetings this week - does not mention Libra individually, it shows that cryptocurrencies designed to reduce price volatility with the possibility of rapid expansion pose a host of potential problems.
Cryptocurrencies designed to reduce price volatility such as Libera are different from other cryptocurrencies such as Bitcoin, because they are linked to a basket of fixed currencies such as the dollar and the euro.
The report also warns that Libra could stifle competition among other service providers and threaten financial stability if users suddenly suffer from loss of confidence in cryptocurrency.
"The G7 believes that no cryptocurrency project designed to reduce price volatility should be operational until legal, regulatory and regulatory challenges and controls are adequately addressed," the draft report says.
The report also casts doubt on the feasibility of the project even if Libra's supporters are addressing the concerns raised by governments and central banks.
The report says that addressing such risks is not necessarily a guarantee of regulatory approval, and Facebook faces intense international scrutiny for its encrypted project,
Facebook has warned that regulatory scrutiny could delay or hinder the launch of Libra
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