By
Chimamanda U. Martha
April 12th, 2024
Facebook’s Libra project is drawing scrutiny from global regulators soon after the announcement last week. After the US, European regulators have asked the company to furnish more details about its cryptocurrency plans.
Facebook’s release of the Libra whitepaper last week has got central banking institutions and regulators talking about it. Soon after Facebook officially announced its plans with cryptocurrency Libra, the US Senate Banking Committee scheduled a hearing next month in July. Joining the chorus is the US Congress which has scheduled another hearing the same month later.
European Regulators Pinning Down Facebook
Britain’s top regulatory agency, the Financial Conduct Authority (FCA) stated that Facebook has given “insufficient” details about Project Libra. FCA chief executive Andrew Bailey stated that looking to the scale of the project and Facebook’s hold over the global user detail they will certainly have to provide more details.
“They are not going to walk through authorization without that,” Bailey told the UK parliament’s Treasury Select Committee. Bailey added that FCA is in constant talks with Facebook. Thus, several meetings will happen before Libra enters the market in 2020.
Besides, regulators from other European countries are also not willing to give Facebook an easy go-ahead, reports Reuters. Speaking at the Crypto Valley Conference in Zug, Domenico Gammaldi, the Bank of Italy’s head of market and payment system oversight, said:
“The white paper, that means ‘white,’ without any information. I’ve read more than 200 pages of comments, and it’s very strange for me to give a personal opinion on 12 pages in the white paper.”
Bank of France Governor Francois Villeroy de Galhau has stressed that Libra will have to strictly abide by the AML rules. Moreover, it adds that the backers of Libra will need to get a banking license if they plan to offer deposit services.
Switzerland Central Bank Remains Calm
While many central banks are perturbed by the arrival of Libra, the Swiss central bank stays calm. Well, we all know that Switzerland is one of the most crypto-friendly nations. This is precisely the reason Facebook chose this European nation for the launch of Libra Networks. Thomas Moser, an alternate member of the Swiss National Bank’s governing board said:
“I think it’s an interesting development and I’m pretty relaxed about it. They have clearly indicated that they are willing to play according to the rules, they have been contacting the regulators.”
Until the start of 2019, before the entry of big organizations in the crypto space, central bank’s refrained from acknowledging crypto as a big threat to the global economy. Now, the entry of Facebook’s Libra is having a crucial impact on their considerations.
On Sunday, June 23, the Bank of International Settlements (BIS) released a report citing the emerging threat to the banking sector posed by big tech firms like Google, Facebook, and Amazon. BIS stated that regulators should step in to alleviate the risks associated with their entry in global finance.
BIS also stated that these tech giants have greater control over the global consumer data and thus they hold a huge potential to rapidly change the global financial industry. It simultaneously warned that “the very features that bring benefits also have the potential to generate new risks and costs associated with market power.”