However, the October report, argues that widely adopted asset-pegged cryptocurrencies, or stablecoins, such as Libra are a growing threat to monetary policy, financial stability and competition.

Bitcoin and other early cryptocurrencies have failed as an “attractive means of payment or store of value”, says a new report from the G7 and Bank of International Settlements (BIS).

Widely adopted stablecoins, dubbed “global stablecoins” in the report, have the potential to reach an international audience and have “significant adverse effects” on the current economic system, it argues.

Meanwhile, “first generation cryptocurrencies like bitcoin have suffered from highly volatile prices, limits to scalability, complicated user interfaces and issues in governance and regulation, among other challenges. Thus, cryptoassets have served more as a highly speculative asset class for certain investors and those engaged in illicit activities rather than as a means to make payments.”

Stablecoin taxonomy – defined as a money equivalent, contractual or property claim, or right against an issuer for an asset – will remain a preeminent legal question for the time being, the report continues. The effects of stablecoins on incumbent money systems such as wire transfers have yet to be fully understood as well.

While stablecoins may offer faster, cheaper and more inclusive payments, they can “only be realized if significant risks are addressed.”

In a footnote, the G7 report says the Swiss Financial Market Supervisory Authority’s (FINMA) handling of the Libra Association, which falls under the regulator’s purview in Geneva, agrees with the G7’s stablecoin recommendations.

FINMA recently said Libra highlights the need for international coordination and “appropriate prudential requirements” for all services offered over that of a payment system.

The report on stablecoins was prepared at the request of the G7 in July, soon after the launch of Libra back in June. While obviously directed in part at the project, the report only mentioned Libra in one footnote.

Responding to the G7, the Libra Association sent out a memo Friday saying the stablecoin is “not intended to change the role and influence of central bankers”, adding:

“Wallets and other financial services operating on the Libra Network (including exchanges and other on and off ramps) will have to comply with regulations, such as local capital controls, which can be tailored to prevent large scale flights from local currency to Libra coins in emerging markets.”

Binance Stablecoin BUSD Tops $100M but Lags Behind Rivals

Binance USD, a U.S. dollar-backed stablecoin, has surpassed $100 million in market capitalization, chipping away at a market still dominated by Tether’s TUSD.

Also known as BUSD, the token is traded almost exclusively on the Binance exchange and its market cap – which roughly corresponds to the total value of dollars deposited with its issuer, Paxos – is currently at $115 million. Binance USD runs on top of the Ethereum blockchain.

Stablecoins are blockchain-based and tied to traditional assets or currencies, such as U.S. dollars. They are used for trading on cryptocurrency exchanges, generally where crypto/fiat pairs are unavailable due to regulatory or banking reasons. BUSD is backed by U.S. dollars in an FDIC-insured U.S. bank and audited on a monthly basis.

Binance is one such exchange where one cannot trade cryptocurrencies using dollars. Therefore, stablecoins like BUSD are important to its business. It lists several other stablecoins, including Tether (USDT), which has much higher volume on Binance than BUSD. In fact, the majority of trading in BUSD, almost 40 percent market, is with Tether while the BUSD/BTC trading pair is second at 35 percent, according to data from CoinGecko.

Almost every asset listed on Binance is paired with Tether, and its volumes are substantial. For example, the USDT/BTC pair had $611 million in volume the past 24 hours. The BUSD/BTC pair only had $16 million in volume during that time.

Yet, BUSD, with its promising early gains, has a shot at being the dollar-backed crypto asset to beat. New York-based Paxos told CoinDesk that BUSD’s market capitalization has grown by more than 400 percent in the past month to $115 million from $22 million.

“The spectacular growth of BUSD shows that the market is hungry for an alternative. We’re excited about this milestone and proud to partner with Binance to deliver an optimal solution for our global users”, Paxos co-founder Rich Teo said in a statement Wednesday.

In addition to BUSD, other bank-audited stablecoins include the Circle and Coinbase-backed USDC, which has a $406 million market cap. Paxos also has its own branded stablecoin, Paxos Standard, which has a $206 million market capitalization.

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