The largest non-profit membership organization set up to run Facebook Libra cryptocurrency project is now seeking to apply for the licensing as a payment system in Switzerland.
The financial regulations of the Swiss FINMA have now confirmed in a meeting of the memorandum on stablecoins yesterday that it had received a request for an assessment of how it would even classify the Libra project as a currently planned. The agency has also added that the range of service which is projected by the Libra Association would need some of the extra oversight.
“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 this means it would be subject to such additional requirements.
In an “indicative classification” of the Libra project, FINMA revealed that a project would even fall under the financial market infrastructure regulation and as currently planned “would require a payment system license from FINMA.”
Regulators across the globe have been raising lots of issues that the Libra would even raise the risk of money laundering with the help of its global cryptocurrency available to the billions of Facebook users. The US Treasury official Sigal Mandelker revealed that the Facebook Libra must meet the highest standards of the regulatory compliance prior to any launch.
The watchdog hinted at the breadth of regulation Libra would require, saying:
“Under the FMIA, all additional services that increase the risks of a payment system must be subject to corresponding additional requirements. This means that all the potential risks of a Swiss payment system, including bank-like risks, can be addressed by imposing appropriate requirements in line with the maxim ‘same risks, same rules’.”
Some of the additional requirements “would relate in particular to capital allocation (for credit, market, and operational risks), risk concentration and liquidity as well as the management of the Libra reserve,” FINMA revealed.
With the Libra planned as a global project, it will require the international coordination from the various regulators, FINMA revealed, especially the definition of requirements for managing the reserve and its
The Libra Association revealed:
“The Libra Association will maintain AML guidelines, which its members will be expected to comply with if they choose to provide financial services on the Libra network. The association will set standards for its members to maintain AML and anti-fraud programs and to cooperate with legitimate law enforcement investigations. It will be the responsibility of developers building on the Libra Blockchain to comply with the laws and regulations in the jurisdictions in which they operate.”