NEW YORK/SAN FRANCISCO(Reuters) – Facebook Inc will face unprecedented regulatory scrutiny over a new digital currency that the social media company hopes will become globally recognized legal tender within a year.
Since Facebook unveiled its cryptocurrency, called Libra, 10 days ago, Reuters has spoken with more than a dozen people with experience in financial regulation, financial technology, payments or cryptocurrency. Few expected government agencies to proceed lightly.
Company - Announcement - Backlash - US - Lawmakers
The company’s announcement was met with immediate backlash from U.S. lawmakers and regulators across the globe, who are concerned that Facebook is already too massive and careless with users’ privacy.
Randal Quarles, chair of the Financial Stability Board, which coordinates financial rules for G20 countries, warned this week that wider use of crypto-assets for retail payments needs close global scrutiny by regulators. Cryptocurrencies such as bitcoin remain one of the least-regulated areas of finance.
Disaster - Perspective - Barry - Lynn - Director
“It’s a complete disaster from a regulatory perspective,” said Barry Lynn, executive director of antitrust advocacy group the Open Markets Institute. “This is a corporation that’s got fires all over the world with regulators. It’s only going to get worse.”
The plan for Libra involves taking customer deposits, investing them in government bonds, holding traditional currencies in reserves and offering cross-border services and transacting in the new coin will require engagement with central banks, financial regulators and enforcement authorities around the globe.
Facebook - Subsidiary - Libra - Transactions - Calibra
The Facebook subsidiary formed to handle Libra transactions, called Calibra, has applied for money-transfer licenses in the United States and registered with the U.S. Financial Crimes and Enforcement Network (FinCEN) as a money services business, a spokesman said.
It has also applied for the license required to operate a cryptocurrency business in New York from the state’s Department of Financial Services, a person familiar with the matter said. Representatives of Britain’s Financial Conduct Authority, the Bank of England, and Switzerland’s financial regulator FINMA have...
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