The Libra Association— the non-profit organization behind Facebook’s Libra— has announced it is seeking to apply to become a licensed payment system under the Swiss Financial Market Supervisory Authority (FINMA).
The association announced on Wednesday that the license under FINMA can empower billions of people. In addition to that, the association has also submitted a request for an assessment of how it would classify the Libra project.
The Swiss financial regulator further noted 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, signifying it would be subject to additional requirements.
The agency further explained that such additional requirements would relate in particular to capital allocation (for credit, market and operational risks), risk concentration and liquidity as well as the management of the Libra reserve.
On the other hand, the Libra association has explained in a statement that Switzerland provides a pathway for responsible financial services innovation harmonized with global financial norms and strong oversight.
It further added:
“We are engaging in constructive dialogue with FINMA and we see a feasible pathway for an open-source blockchain network to become a regulated, low-friction, high-security payment system.”
Ever since Libra launched, regulators all over the world have shown concerns over Libra raising the risk of money laundering through its global cryptocurrency available to millions of users on Facebook. Just yesterday, U.S. Treasury official Sigal Mandelker reiterated that Facebook’s Libra project must without doubt meet the highest standards of regulatory compliance prior to its launch.
Most recently a group of U.S. lawmakers, led by Democratic Congresswoman Maxine Waters, met FINMA officials to discuss the Libra project. However, the meeting did not erase Waters’ concerns. In fact, Congresswoman Maxine Waters—who called for a moratorium to halt the project—recently traveled to Switzerland to examine how the Libra project would work.
Global money-laundering watchdog the Financial Action Task Force (FATF) is also said to be looking into Libra. FATF President Xiangmin Liu stated that they want to make sure that in case there are significant risks, they must be addressed and dealt with.
In response to the abundance of criticism, the Libra association has reiterated its commitment to work with regulators.
“Since our vision for the Libra project was announced three months ago, we have maintained our commitment that technology-powered financial services innovation and strong regulatory compliance and oversight are not in competition,” said Dante Disparte, Libra Association’s head of policy and communications.