Recently, there was news that Facebook was planning to launch its own cryptocurrency Libra. Facebook seems to have bigger plans; they want to have their payment system. Facebook’s Libra seeks to apply for the license of making it a payment system in Switzerland.
FINMA, the Swiss financial regulator, has confirmed that they have received a request for an assessment of how Libra project in its current position can be classified. The agency said that the range of services that Libra association had projected would need ‘extra oversight.’ FINMA said that
“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”
Which means that it would be subjected to additional requirements. It also said,
“These would extend to capital allocation for credit, market and operational risks, risk concentration and liquidity, and the management of the Libra reserve.”
The Swiss regulatory body has put down a condition for issuing the license that the returns and risks related to the management of the reserve would be the sole responsibility of Libra Association and not of any third party, as in this case the ‘stablecoin’ holders.
Many apprehensions are being aired by various financial watchdogs regarding the risk of money laundering that could take place. Various government agencies are also viewing their concerns regarding the possible terror funding and transactions by various illegal institutions that could happen. Therefore, FINMA has very clearly mentioned that the company has to build such a design that such trepidations are put to rest. Also, the financial body has its own Anti-money Laundering rules in place which is applied to all the institutions registered under it.
Facebook is now expanding towards cryptocurrency and e-payments. With its large client base, they could bring the digital coins to the mass and help in easy transaction too. With such a big player getting into the payment business they could popularize digital banking and e-payment system.