The US treasury department agreed that the Libra crypto project has to be observed since the need for an investigation into Facebook’s forthcoming stablecoin is growing according to the letter from the Representative Emanuel Cleaver as we are about to find out more in the Libra coin news today.
According to a press release published by the Congressman Cleaver, the US Treasury provided an affirmative response to Cleaver’s appeal to examine Libra and the wallet Calibra for potential systemic risk. Cleaver sent the letter to the social media giant- Facebook, Calibra, the Office of Financial Research and the Financial Stability Oversight Council. In September, Facebook stated that it would postpone the launch of the cryptocurrency until the regulators approve it.
The Department of Treasury responded to Cleaver’s request and noted that Libra has to be compliant with Anti-Money Laundering/Combating the Financing of Terrorism guidelines as well as Bank secrecy act requirements. The US Treasury questioned the ability of both US and foreign regulators to oversee Libra and require corrective action because the issues have to be addressed before Libra is launched.
The agency added that it will monitor Libra and the cryptocurrency market in order to address the possible regulatory gaps. Cleaver stated:
“It is absolutely critical that any effort to launch a cryptocurrency be met with the most stringent of examinations to ensure such an endeavor does not pose a systemic risk to the global economy. I appreciate Facebook’s willingness to work with federal regulators as the company seeks to launch Libra, which has the potential to update—or upend—our financial system. As Facebook works down this regulatory road, it is imperative that we affirm that terror financing and money laundering is not advanced through Libra, and, according to FSOC, significant concerns remain.”
Cleaver received the letter one day before the Facebook CEO Mark Zuckerberg testified before the House Financial Services Committee regarding Libra. At the hearing, the representative Tim Mahoney asked Zuckerberg to commit to keeping libra from all of the wallets that maintain lower standards of Know Your Customer and AML Controls than those Facebook is promising for its wallets. It’s important that the US Treasury agrees to monitor Libra so we will see what the other agencies will think.
Mastercard Left Libra Over Regulatory And Viability Concerns: CEO
“It went from this altruistic idea into their own wallet. I’m like: ‘this doesn’t sound right,’" Banga told the news.Mastercard left Libra because of reasons which are now emerging. According to Banga, financial inclusion would mean that a government is able to pay citizens in a certain currency which they must be able to understand how to use and must be usable in day-to-day transactions for items such as food.
"If you get paid in Libra [coin] . . . which go into Calibras, which go back into pounds to buy rice, I don’t understand how that works," he said.The cryptocurrency news today also show that a lack of a clear business model for Libra is what raised another red flag for Mastercard. The Libra coin news before showed that Mastercard was not the only one leaving the stablecoin project - firms like Visa and PayPal did the same at the same period.
"When you don’t understand how money gets made, it gets made in ways you don’t like," the CEO of Mastercard said.Once Mastercard left Libra, the company started investigating the potential use of the project. Banga appeared to have concerns when association members would also not firmly commit to the controls of data management including the know-your-customer (KYC) and anti-money laundering (AML) legislation. Visa, on the other hand, had pulled out because the project had not been able to "satisfy all requisite regulatory expectations" as a spokesperson later confirmed. Out of the 28 founding members of the Libra project, eight have left. The British telecom conglomerate Vodafone was the last leaving in January 2020 when it decided to focus on its own digital payments service. As Mastercard left Libra, the payments giant adopted a very cautious approach to distributed ledger technology.
CEO Of Facebook Talks About Libra Again And How It Is Being Handled
"We are taking multiple approaches on payments where things like what we are doing with payments and WhatsApp or Facebook Pay are overall built on top of traditional payment infrastructure. The longer-term work that we are proposing around Libra is now being handled by the independent Libra foundation."The CEO of Facebook also stated that the firm is working on creating a digital wallet which will work well with Libra - noting that most companies that make payments are national and based in a country without any incentive to make this work all over the globe.
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.
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