Facebook Is Looking To Achieve Global Regulatory Compliance As Libra Vies For New York BitLicense
Facebook’s Libra coin, the new initiative from the company in order to create its own crypto and bring a frictionless and globally-available currency to all its clients is looking to get the New York BitLicense, considered the hardest regulatory approval to get in the United States.
The company is taking all the steps to appease regulators all over the world before the launch of Libra, but many experts seem to be concerned that the company will not have a fully successful enterprise this time.
In order to achieve its global regulatory compliance, Facebook will have to carefully deal with central banks and financial regulators from several countries. This will involve thousands of officers from dozens of countries.
According to Sean Park, the founder of CIO of Anthemis, a venture capital company, Facebook is far from having won the battle so far. This is not to say that the company has not made any kind of progress. Calibra, the subsidiary that will oversee the token and its wallet, has been already registered with the U. S. Financial Crimes and Enforcement Network (FinCEN), for instance.
Trying to obtain the BitLicense from New York’s Department of Financial Services is another smart move because it generally takes a long time and Facebook may even get rejected, so the company needs to work very carefully here.
Obviously, Facebook is not only dealing with U. S.-based regulators. The company has already been talking with Britain’s Financial Conduct Authority (FCA), the Bank of England and FINMA, the Swiss financial regulator. Recently, the Russian Ministry of Finance also affirmed that Libra will be treated just like any other token in the country, too.
Facebook Will Not Get A Free Pass
Even if Facebook is right in making all these steps as soon as possible, the company is far from having a free pass, in Park’s opinion. As soon as the product is launched, the authorities of the United States, European Union and India are going to be looking closely to the new coin.
The Central Bank of Singapore also seemed somewhat skeptic of the token and affirmed that it would require more information about the project before being able to allow it.
As you may know, Facebook is also being accused of leaking private information, so the global confidence in the company is far from high right now. If Facebook already had troubles with regulators, things are bound to take a turn for the worse with Libra.
Obviously, it should be remembered that Libra is not set out to be the new Facebook Coin. The new token is also managed by the Libra Association, which contains companies such as Uber, Mastercard, Visa, Paypal and others and is based in Geneva.
While Facebook is expecting the scrutiny, nobody knows how harsh the global regulators will actually be. The Bank of International Settlements, for instance, is already expected to place some restrictions on this new currency. The chair of the Financial Stability Board, Randal Quarles, is also reported to have affirmed that the company needs bigger scrutiny in order to be allowed to launch Libra.
According to representatives from Facebook, Libra is not planning to acquire any local banking licenses and all the value that the token will have will come from investment in government bonds and currencies, just like governments do with their sovereign fiat currencies.
These reserves, as affirmed by a Representative of the company to Reuters, will also fully follow the monetary policies of the countries that hold these assets.
At the moment, not a lot is known about Facebook’s ability to discover money laundering and tax evasion or fraud, so the company will have to take care of that before it can be whitelisted by international regulators which are often worried about this kind of question.
Jeff Bandman, a former U. S. Commodies Futures Trading Commission (CFTC) executive, has affirmed that Facebook has not yet fully considered the position that it is taking. To him, the company will use this year to figure that out and to narrow (and rescale) its project.
He affirmed this because he believes that such a huge project in an attempt to disrupt the global financial system is a very audacious plan and it has to be laid out well if it is supposed to work.