Facebook’s Libra cryptocurrency sustained another blow on Wednesday when officials from Switzerland suggested that the proposed system of payments might face stringent rules similar to that of banks, even in the existing presence of strict anti-money laundering rules.
The announcement to launch the new cryptocurrency in June came through as the world’s largest social media network is expanding towards e-commerce. Libra has got all starry eyes from regulators worldwide due to worries about destabilizing the financial system of the world.
The news by the supervisor of Switzerland’s markets of finance, FINMA that was constituted as Libra Association, based out of Geneva, insisted on its plan to register to become a digital payments system with an authorized license in the nation.
FINMA spoke that the project is more than a mere global framework of payments and hence can be vulnerable to risks & extra requirements, like liquidity, risk capital allocations and reserve management for the firms who will be supporting the digital coins.
“For bank-like risks, for example, bank-like regulatory requirements would apply,” FINMA spoke in initial monitoring of the project on the basis of information gathered so far.
“The highest international anti-money laundering standards would need to be ensured throughout the entire ecosystem of the project,” FINMA said in a statement.
Regulators from the United States & other big economies immediately raised flags over the digital currency that will be operated straight by the social media giant’s 2.4 billion counts of monthly users.
Increased clarity on a regulatory pathway in Switzerland is key for the association’s development and will help inform our conversations with regulators in other markets,
said Dante Disparte, the Libra Association’s head of policy and communications. The statement was made in an email as a response to the Reuters queries.
“The Libra coin is simply a proxy for an instant payment system that is low friction and high trust,” he said.
An office spokesman of Libra spoke about getting a clear picture on how the new digital currency is going to be controlled in Switzerland for the project’s better development & guidance from FINMA.
Even if FINMA ultimately gave a clean chit to the currency, it’s not necessary that would convince authorities of other nations.