Libra to seek registration as a payment system

September 16, 2019 | Digital Assets
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Swiss financial regulator FINMA said it had received a request from the Libra Association for assessment of Libra’s classification

Swiss financial regulator FINMA has released a statement on Facebook’s cryptocurrency project. The Libra project would indicatively classify under financial market infrastructure regulation, the regulator said. On a current evaluation, it would need a payment system license from FINMA.

However, FINMA referred to the proposed issuance of Libra payment tokens. It said: “the services planned by the Libra project would clearly go beyond those of a pure payment system.”

As such, the Libra project might need additional oversight.

“Same risks, same rules”

The Swiss regulator also said that any additional services provided beyond that of a payment system would require additional compliance.

Such an additional regulatory burden could include capital, risk concentration, liquidity, and management of the Libra reserve.

“This means that all the potential risks of a Swiss payment system, including bank-like risks, can be addressed by imposing appropriate requirements in line with the maxim’ same risks, same rules’.”

FINMA may add another condition before granting Libra a payment system license. That would relate to the returns and risks from the management of the currency reserve. These would be “born entirely by the Liberal Association and not by the stablecoin holders.”

FINMA also cautioned that since the Libra project was global in scale, it called for international coordination between regulators. It cited a significant risk from money laundering.

Global plans, global scrutiny

Meanwhile, the Paris-based Financial Action Task Force (FATF), which acts as the worldwide watchdog on anti-money laundering, also echoed FINMA’s concerns.

It said it was monitoring the progress of the Libra project closely.

“We want to make sure that if there are significant risks, they need to be addressed,” said Xiangmin Liu, President, FATF.

“We have talked about finding [a] suspicious activity as being like finding a needle in a haystack,” he said. “Well, that haystack is getting bigger and bigger, and is moving all the time.”

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