Facebook is holding talks with the US Commodity Futures Trading Commission (CFTC) about the future of its crypto project. CFTC’s chairman, Christopher Giancarlo said the talks are still in the early stages. According to him, these meetings seek to find out whether Facebook’s stablecoin could fall under CFTC’s remit.
Giancarlo further noted that these talks are,
a sign of how the world’s largest social media platform is laying the groundwork for an ambitious push into payments,
We’re very interested in understanding it better,
Giancarlo said of Facebook’s plans.
We can only act on an application, we don’t have anything in front of us.
Facebook Proceeds with Caution to Avoid Complications
The social giant is working to launch a crypto coin that is internally known as “Globalcoin.” The coin will be a stablecoin and its first use cases will be on Facebook and Whatsapp. However, the firm’s ultimate goal seems to be introducing the coin’s use across the internet.
Despite Facebook holding talks with the CFTC, it is not clear whether Globalcoin will fall under the agency’s purview. Regardless of this fact, Facebook is taking caution to ensure it does not face any compliance issues.
According to The Business Times, the CFTC only has authority over futures and derivatives. Therefore, any financial instrument that is associated with Globalcoin would fall under its remit. Nonetheless, if Facebook decides that the coin will be traded through cash-based markets only, the CFTC would not have authority over it.
CFTC’s Chairman Says Globalcoin’s Design is Clever
Per Giancarlo, chances are that Facebook’s coin will be traded against the US Dollar. He believes that this design is “very clever” because pre-existing currency futures could remove the need for a derivative linked to the coin. However, he noted that some basic risk may still exist. According to him, this risk would emerge when the price of an underlying asset does not sync with its derivative.
Other than the CFTC, Facebook has held talks with the US Treasury. Reportedly, neither party has disclosed what the discussions were about. However, it is likely that the US Treasury’s financial stability oversight council will keep tabs on Facebook to ensure its crypto project complies with AML and KYC rules.
This news comes after Facebook recently registered a crypto firm in Switzerland. Reportedly, the new firm would provide financial and technology services to develop related hardware and software. Facebook refused to comment on the matter.
Do you think Facebook’s talks with financial watchdogs will help clarify the legal aspects of crypto? Let us know in the comments below.