Facebooks Libra coin to face regulatory scrutiny

The social media company hopes will become globally recognised legal tender within a year, according to Reuters. Facebook’s announcement was met with immediate backlash from US lawmakers and regulators across the world, who are concerned that the social media is already too massive and careless with users’ privacy.

The plan for Libra involves services such as taking customer deposits, investing them in government bonds, holding traditional currencies in reserves, etc. Moreover, offering cross-border services and transacting in the new coin will require engagement with central banks, financial regulators and enforcement authorities around the globe.

So far, Calibra, the Facebook subsidiary formed to handle Libra transactions has applied for money-transfer licenses in the US and registered with the US’ Financial Crimes and Enforcement Network (FinCEN) as a money services business. It has also applied for the license required to operate a cryptocurrency business in New York from the state’s Department of Financial Services. Representatives of Britain’s Financial Conduct Authority, the Bank of England, and Switzerland’s financial regulator FINMA have also said Facebook has been in touch, according to Reuters.

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.