Facebook wants to place currency Libra under Swiss and US supervision
Facebook plans to launch its proposed cryptocurrency, Libra, only with the approval of regulatory authorities. David Marcus, who is in charge of Libra at Facebook, explains that the Swiss Financial Market Supervisory Authority (FINMA) should ensure «an appropriate regulatory framework» for the «Libra Association,» which is headquartered in Geneva.
Concerns would have to be addressed before launch, according to a speech text by Marcus released ahead of a hearing Tuesday afternoon Swiss time before the U.S. Senate Banking Committee. Facebook does not intend to offer its Libra currency until all regulatory concerns are resolved, Marcus asserts.
"The Libra Association expects to be licensed, regulated and subject to supervision," Marcus said. The Libra Association has already held initial discussions with Finma, he said. The discussions are also confirmed by Finma: "Finma is aware of the 'Libra' project and is in contact with the initiators of the project," a Finma spokesman said on Tuesday when asked. However, he did not want to go into details: "Basically, it is Finma's role to assess such projects from the perspective of Swiss financial market law."
In addition to Finma, the Libra Association wants to cooperate with U.S. authorities, for example, in the fight against money laundering, according to Marcus. For example, it wants to register as a payment service provider with the U.S. Treasury Department's Financial Crimes Enforcement Network FinCEN.
Libra will not compete with traditional currencies, Marcus assures. "The Libra Association will work with the Federal Reserve and other central banks to ensure that Libra does not compete with national currencies or interfere with monetary policy."
Libra is to be linked to a basket of the currencies US dollar, British pound, euro and yen and hedged by short-term government bonds, as Marcus confirms earlier statements. Such a linkage is also intended to avoid massive price fluctuations as with the cryptocurrency Bitcoin.
The Swiss authorities could also play an important role in terms of data protection. The Libra Association will not hold any personal data about the people who will use the Libra blockchain, Marcus reassured. "It cannot and will not monetize any blockchain data." In that regard, he said, the Federal Privacy and Public Information Commissioner will be the Libra Association's regulator.
Facebook subsidiary Calibra - which provides Facebook users with an electronic "wallet" on the Libra blockchain - will also not pass on the financial data to Facebook, Marcus said. Therefore, the data cannot be used for targeted advertising, for example.
One benefit Facebook will derive, he said, is that many small and medium-sized businesses will be able to conduct transactions with their customers directly through the Facebook platform in the future. "We hope that will lead to consumers and businesses using Facebook even more in the future." That, he said, will then lead back to higher advertising revenue for Facebook.
Libra is scheduled to launch in the first half of 2020. Facebook's announcement in June startled central banks and politicians around the world. Most recently, US Treasury Secretary Steven Mnuchin expressed concern about the plans.
His ministry has made it clear to the group and other financial services providers that they must implement the same anti-money laundering and anti-terror financing measures as traditional firms, Mnuchin said Monday. The social network is "a long way" from getting the green light from authorities on Libra, he said. (sda)
