Regulators can’t make sense of Facebook Libra coin: and that’s a big problem
Regulators around the world are confused by Facebook’s new Libra coin, which could be a significant bump in the road for the social media giant’s forthcoming plans for their sort-of-cryptocurrency.
Britain’s Financial Conduct Authority (FCA) has said on Tuesday that there was “insufficient” detail to understand Facebook’s plans, with the FCA’s chief executive Andrew Bailey telling a UK Parliament Treasury Select Committee that because Facebook is big enough to have an impact on public policy more information is essential.
Speaking to the committee, Bailey said: “They are not going to walk through authorisation without that.”
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Bailey mentions that the FCA, Bank of England and Britain’s finance minister are working together on Facebook’s proposal, and that they’re already in contact with Facebook.
Meanwhile, the governor of the bank of France, Francois Villeroy de Galhau, has spoken out to say that Libra must respect anti-money laundering regulations and seek banking licenses if it will be offering banking services
“The risks are increased by the anonymity that Libra users would have,” Villeroy said in an interview with French weekly magazine L’Obs, before talking about how Facebook would have to go the extra mile to make sure both transactions and user data are fully secure.
“If the project seeks to go beyond payments to offering banking services like deposits, it will then have to be regulated like a bank with a banking license in all the countries it operates. Otherwise it would be illegal,” he said.
Facebook seems to be attracting extra scrutiny over several other cryptocurrency coins that have launched over the last few years, but as Facebook seems to be, at least outwardly, appearing to fix some of the problems with cryptocurrency this scrutiny, at least to someone who has covered cryptocurrency and its nuances for a while, seems necessary.
Regulators aren’t the only ones confused. It’s not clear yet how the fiat backing of Facebook’s Libra currency will work, or how the money wallet app Calibra will work, or really, just about how any of it fits together. It will launch in 2020.