Facebook’s Libra path to operability will be filled with hundreds if not thousands of regulatory and licensing stages from different regulators. Since its launch 14 days ago it has created a wave of criticism about privacy, regulatory and antitrust concerns by central bankers, industry leaders and consumer advocacy groups around the globe.
Anna Irrera and Katie Paul interviewed “more than a dozen” persons for their subsequent Reuters article. All of them are experienced professionals in regulatory, financial technology, cryptocurrency, and payment processes. Most of them think they will face rigorous and demanding processes by lots of government agencies.
Barry Lynn, executive director of the Open Markets Institute, an anti-trust advocacy group, said the Libra project is “a complete disaster from a regulatory perspective.”
Calibra files for a BitLicense with FinCEN
Facebook has created a subsidiary named Calibra for the development of the user’s application, which includes a Libra wallet to handle financial transactions and other tasks. According to this article, Calibra has applied for a license for money-transfer activities in the USA, also registered with FinCEN, the U.S. Financial Crimes and Enforcement Network, and applied for a license to operate with cryptocurrencies in New York. It seems, also that Facebook has started to contact British and Swiss authorities as well.
Regulatory and Compliance
As Libra aims to be a global currency, there will be dozens of issues to address, besides market regulators, consumer protection groups, and illegal money use, it is likely that Libra’s payment network might need to adhere to the Principles of Financial Market Infrastructures.
“Besides central banks, markets regulators, consumer protection watchdogs, and agencies that tackle money laundering, tax evasion and other financial crimes, Facebook’s payment network might also have to adhere to the Principles for Financial Market Infrastructures that are set by the Bank for International Settlements and the International Organization of Securities Commissions.” Source – Reuters
A Facebook representative said that the scrutiny was expected and welcome. He stated that Libra was announced early on purpose, with the intent to hold discussions openly and gather feedback from them.
As our previous article reveals, the potential rewards outweigh the hurdles they will have to jump. But, their costs could be huge, just to set up an internal compliance organisation. According to the mentioned Reuters article, Western Union Co has spent 1 billion in compliance over the last five years.
The next stage will be July 17 when Facebook will attend a dedicated U.S. hearing about the Libra project.