Facebook’s cryptocurrency project Libra is now seeking a Swiss payment license, said financial watchdog FINMA on Wednesday.
Social media giant Facebook (FB) first announced its plan to launch a cryptocurrency in June, as an attempt to move into global payments that has drawn intense scrutiny from global financial authorities.
The stablecoin Libra, which is planned to be launched next year, would be backed by a basket of international fiat currencies.
The regulator confirmed that the Libra Association has requested an assessment of its Libra project under Swiss supervisory law.
“Due to the issuance of Libra payment tokens, the services planned by the Libra project would clearly go beyond those of a pure payment system,”
FINMA said noting that it would likely have to subject to greater supervision and additional requirements.
The need for extra supervision will depend on how the Geneva-based Libra association plans to manage the fund and who would bear the risk of losses.
These additional requirements would extend to capital allocation for credit, market, and operational risks, risk concentration, and liquidity as well as the management of the Libra reserve.
“We are engaging in constructive dialogue with FINMA and we see a feasible pathway for an open-source blockchain network to become a regulated, low-friction, high-security payment system,”
the Geneva-based Libra Association said.
US Under Secretary of Terrorism and Financial Intelligence Sigal Mandelker told reporters in Switzerland on Tuesday that cryptocurrency project must meet the highest standards of combating terrorism financing and money laundering.
“Whether it’s bitcoin, Ethereum, Libra, our message is the same to all of these companies: anti-money laundering and combating the financing of terrorism has to be built into your design from the get-go,”