Facebook in Talks with CFTC Regarding GlobalCoin Regulatory Scope

  • US Regulator in early stages of conversation with social media giant to understand if “GlobalCoin” falls under its remit

Facebook Inc is currently in talks with the US derivatives regulator, the Commodity Futures Trading Commission (CFTC) over its plans for a digital currency called “GlobalCoin,” reported the Financial Times on Sunday.

The regulator is in the “very early stages of conversations” with the social media giant in an effort to understand the company's plan for the digital coin. The goal is to find out if the would fall under the scope of the regulators.

“We’re very interested in understanding it better,” CFTC Chairman, Christopher Giancarlo was quoted as saying in the report. “We can only act on an application, we don’t have anything in front of us.”

Though Giancarlo said it’s too early now to say if GlobalCoin could fall under CFTC’s remit, he did say if the cryptocurrency could be backed by the US dollar, there might be less of a need for derivatives attached to it.

“That’s very clever,” Giancarlo commented on the US dollar backing design. However, a top compliance issue by regulators is whether and how the social media giant will adhere to and further implement the know your customer and anti-money laundering measures.

The social media platform with 2.3 billion users is creating the cryptocurrency aimed at transferring money across borders and to make online purchases under Project Libra. Facebook is accelerating its plan to create a new digital payments network and the early talks with the regulators came as the company approached central banks and watchdogs to seek guidance on its plan for the digital coin.

In recent weeks, Facebook has also spoken to the US Treasury to provide an update on the project. Mark Carney, the governor of the Bank of England also discussed the project with the company as part of a broader meeting on the future of finance.

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