The Libra Association is requesting a payments license from the government of Switzerland – more specifically the Switzerland’s Financial Market Supervisory Authority (FINMA) for its planned stablecoin project, according to reports on Reuters.
An official statement today in the latest cryptocurrency news shows that the Switzerland-registered Libra Association – which is a not-for-profit membership organization established to govern the Libra Network. The document explained how Libra Association is requesting a choice to coordinate a regulatory framework with the Swiss watchdog. It also says:
“Switzerland offers a pathway for responsible financial services innovation harmonized with global financial norms and strong oversight. We are engaging in constructive dialogue with FINMA and are encouraged to see a feasible pathway for an open-source blockchain network to become a regulated, low-friction, high-security payment system.”
As many best cryptocurrency news sites report, the FINMA has notably released guidance on regulatory requirements for payments on the blockchain – which applies to the blockchain service providers including exchanges, wallet providers and trading platforms.
Now that the Libra Association is requesting a Swiss payments license, the new guidance adheres to the framework for digital asset regulation. This was issued this June by the intergovernmental Financial Action Task Force (FATF) which includes numerous provisions for Anti Money Laundering (AML) measures, Know Your Customer compliance, systems for risk monitoring and more.
Earlier this week, the United States Treasury official had told reporters in Geneva that it was imperative that the Libra project should satisfy the highest standards for combating money laundering and countering terrorism financing if it is to be approved by the lawmakers and regulators.
While the Libra Association is requesting a Swiss payments license, a hearing before US representatives in mid-July this year featured David Marcus – the chief of Facebook’s Calibra wallet service – talking about the choice and how it “nothing to do with evading regulations or oversight.” Marcus’ statement was in the coming altcoin news because he argued that the jurisdiction is an international hub conducive to doing business.
In August this year, some US lawmakers visited Switzerland to meet with the local financial regulators and discuss officials about Libra, expressing the “concerns […] with allowing a large tech company to create a privately controlled, alternative global currency.”
Vodafone Quits The Facebook Crypto Project Libra Association
‘’We have said from the outset that Vodafone’s desire is to make a genuine contribution to extending financial inclusion. We remain fully committed to that goal and feel we can make the most contribution by focusing our efforts on [mobile payments platform] M-Pesa.’’Vodafone’s reason for leaving Facebook’s Libra crypto project opens up more issues for Libra itself. M-Pesa is now a successful mobile money transmission system that is popular in East and Southern Africa while Safaricom recently signed a deal with California-based global remittance provider Ria money. This deal will enable M-Pesa customers to send payments to more than 20 countries across the globe. Apart from Vodafone, some of the early backers such as PayPal and Mastercard have already quit the Facebook Libra Association and both of the platforms pointed to the growing regulatory pushbacks against the project as the reason for the decision to pull out of the partnership.Back in 2019, the US Senators urged the Libra backers such as Visa and Stripe to leave the project. Despite the criticisms against the project, the Libra Association continued to move forward with the proposed digital currency platform and the developers of the crypto project released a second roadmap with a mainnet testing already underway. Libra is still facing a lot of criticism while countries are moving towards creating their own central bank digital currencies and the banks from Canada, England and Switzerland are now forming a CBDC think tank.The coalition says it will exchange many ideas on how to develop sovereign digital currencies for their respective nations since Australia is also experimenting in the digital payment system that will run on the Ethereum blockchain. China seems to be leading the CBDC race since it has accelerated plans after Libra launched its white paper.
Libra Stimulated Us To Take CBDCs Seriously: Japanese Banking Veteran
“The latest decision is not just about sharing information. It’s also an effort to keep something like Libra in check [...] Major central banks need to appeal that they, too, are making efforts to make settlement more efficient with better use of digital technology.”Yamaoka is confident that Libra stimulated the markets and put some pressure on financial institutions to lower the costs of transactions. With this, a lot of fundamental questions about nation states' control over currency issuance were also raised.However, the banking veteran and ex-BOJ official was in the Libra news for saying that central banks may stifle private-sector innovation by using CBDCs to enhance the effectiveness of central bank measures. As he noted:
“In the world of central bankers, the idea of using CBDCs to enhance the effect of monetary policy seems to have subsided somewhat. There are increasing doubts about the effect of negative interest rates as a policy tool. If so, do you want to issue CBDCs for the sake of deploying a policy with questionable effects?”The expert concluded stating that while Libra stimulated us to see CBDCs in a different light, monetary officials need to be sane in wake of the new changes.
“If you want to make monetary policy effective, you need to ensure people keep using the currency you issue,” he concluded.
Australia’s APRA Considers Overlooking Facebook’s Calibra
“The new framework is intended not only to be fit for purpose for the current financial system but also be able to accommodate future developments and technological advances, such as proposals for global stable coin eco-systems that have been subject to significant attention in recent months. Under this proposal, APRA’s role in the framework would be to oversee wallets that are widely used as a means of payment and store of significant value for a reasonable amount of time.”Facebook’s Libra could indeed be a stabelcoin backed by real assets but it is not the only digital payment service that is created by large technological companies. Apple Pay, for example, is another type of digital wallet that has now more mass acceptance while APRA decides whether to support this as well. The report informs that because of apple’s product that is already in works with the existing infrastructure run by banks, it could attract a lot lower level of regulatory scrutiny.In addition, the Reserve Bank of Australia doesn’t really believe that the country will need its own central bank digital currency. As per the recent reports, the institution believes that the Australian people already have well-established and regulated digital payment services so they don’t really need a stabelcoin. With Libra’s continuous regulatory problems before the launch, the question remains whether in any other country they will start adopting Libra as a legal form of payment.
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