As informed by Facebook on Monday, it will not be proceeding with the roll-out of its cryptocurrency, Libra, till all the regulatory concerns are addressed. This comes in reaction to the US treasury secretary taking the step of discerning concerns that Libra could be used for illicit activity.
David Marcus, looks after Facebook’s blockchain efforts, has planned to inform Congress that Libra is not being put together to contest with traditional currencies or intervene with monetary policy.
“The Libra Association, which will manage the (Libra) Reserve, has no intention of competing with any sovereign currencies or entering the monetary policy arena,” Marcus was due to say on Tuesday, according to prepared testimony released by the Senate Banking Committee. “Monetary policy is properly the province of central banks.”
“Facebook will not offer the Libra digital currency until we have fully addressed regulatory concerns and received appropriate approvals,” he said.
Mnuchin, the latest senior US regulator, has shown discomfort with Libra lately, essentially in guarding against money laundering and other illicit use. “They’re going to have to convince us of very high standards before they have access to the US financial system,” he said.
In his prepared testimony, Marcus informed the Libra Association, the companies behind the Facebook-led cryptocurrency, planned to register as a money services business with the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) and fully expected to comply with anti-money laundering and Bank Secrecy Act rules.
Since the time Facebook has announced the launch of Libra, its cryptocurrency, it has received humungous criticism and backslash from policymakers across the globe citing concerns over data security, money laundering and consumer protections.
Addressing some of those concerns, Marcus said in his prepared testimony that partners providing financial services with Libra will be required to comply with anti-money laundering rules. The Libra Association will not hold personal data of users beyond basic transaction information, and personal information provided to Calibra, the digital wallet Facebook is developing to hold Libra, will not be shared with the social media company and cannot be used for targeting ads.
Marcus added that he expected the Swiss Federal Data Protection and Information commissioner to be Libra’s privacy regulator because the Libra Association is headquartered in Geneva. The association is also in preliminary talks with the Swiss Financial Markets Supervisory Authority on “an appropriate regulatory framework.”
“I am proud that Facebook has initiated this effort here in the United States,” his testimony said. “I believe that if America does not lead innovation in the digital currency and payments area, others will. If we fail to act, we could soon see a digital currency controlled by others whose values are dramatically different.”