FINMA, Switzerland’s market watchdog is set to inspect Facebook’s Libra stablecoin strictly before approving it. A report unveiled this news on September 11, noting that Libra could face the same rules that apply to banks. Apart from these rules, the watchdog promised to subject the proposed stablecoin to tough AML laws.
In the report, the watchdog said,
For bank-like risks, for example, bank-like regulatory requirements would apply,
However, the watchdog noted some aspects of Libra’s regulation won’t fall within its scope. These include the coin’s taxation, competition, and data protection.
This news comes after Facebook unveiled that it would seek a license from FINMA to operate as a regulated payments system. However, this license would need the social firm to address a lot of regulatory concerns first. According to FINMA, the Libra project would be more than just a global payments system. As such, the watchdog asserted that the project would be subject to more requirements. These requirements range from liquidity and capital allocations for risk to the management of reserves that will back the coin.
A Single Country Cannot Regulate Libra
In an interview, Mark Branson the head of FINMA said,
If a financial center has ambitions, it must be able to live with attention,
He added that global watchdogs had taken a negative stance on Libra because,
A project of such a global dimension can be addressed only via international coordination and consultation with other supervisors and regulators…It is illusory to believe a single country can regulate and oversee a project like Libra on its own. The supervision of UBS or Credit Suisse also does not take place in complete isolation.
Branson went on to note that FINMA would focus on reducing money laundering with the crypto. According to him, if Libra would trace and avail transactions, it would be a useful tool in fighting money laundering.
Do you think Facebook will be able to meet FINMA’s requirement to get a license to operate as a payment system? Let us know in the comments below.
Facebook unveiled plans to roll out Libra in June. This coin would allegedly help improve cross-border payments. According to the firm’s plans at that time, it sought to launch the coin in the coming year. The social firm went on to set up the Libra Association, a nonprofit that would oversee the coin.
However, Libra has been attracting a lot of criticism from global watchdogs. For instance, US legislators called on Facebook to halt the development of Libra just after its official unveiling.