Facebook’s crypto endeavor has been caught in a regulatory limbo of sorts ever since the official whitepaper for project Libra came out. The social media behemoth has taken blow after blow from skeptical regulators across the globe. However, in spite of the regulatory attacks, it seems that Libra has somehow caught a break with some of the Swiss regulators.
According to a Reuter’s report on October 1st, Mark Branson, head of Swiss financial supervisor FINMA, shared that he is more concerned about the dark corners of the budding cryptocurrency industry than he is of Facebook’s stable coin. By “dark corners” of the crypto industry, Branson was referring to the crypto projects that develop on the outside of the borders of official scrutiny.
Branson explained that projects which are born unchecked and stay so are more worrisome as compared to stable coin project of Facebook, which according to him, is being handled with transparency and openness. He added:
I am much more nervous about projects which develop in a dark corner in the financial system somewhere, spread themselves out through cyberspace and one day are too big to be stopped.
It is important to note the connection between the social media giant’s crypto project and Switzerland. As the Libra Association, which will be responsible for overseeing the forthcoming digital coin, is based in Geneva, Switzerland has been the epicenter of much of the scrutiny. Given that Branson’s office is among those that will be supervising the project, the report explained.
Branson, however, did in no way imply that Libra might get an easy pass with the Swiss regulators as he emphasized that the digital currency will have to face and abide by the same strict rules that apply to the banks. In addition to that, it will also have stick to the anti-money laundering (AML) laws, which are already defined.
But it’s not all loom, gloom and impending doom for Libra’s presence in Switzerland, as tough laws don’t necessarily imply that the project will be completely stonewalled by the regulators, Branson explained while adding:
We are not here to make such projects impossible. We will respond to them with an open mind, with an attitude that same risks require same rules. Our rules and standards are non-negotiable
Despite the fact that the country has a robust regulatory and supervisory framework, Switzerland could very well be the ray of hope Libra desperately needed. As earlier last month the country’s watchdog revealed that it was open to international cooperation and oversight of the way in which Facebook’s planned cryptocurrency network will be regulated.
Branson, in his interview with Neue Zürcher Zeitung (NZZ) acknowledged that it was crystal clear to him since the beginning that a project of Libra’s magnitude would have huge dimensions and implications. However, Branson wasn’t discouraging of Facebook’s stable coin as he further added that a project of Libra’s global significance can only be tackled through international coordination and consultation.
Additionally and most importantly, Branson might have just given away the news that Switzerland is ready to approve Libra when during his interview he said, “[It] fits perfectly into our regulatory framework”. While adding that:
We have just published a guide on how to classify stablecoins under Swiss law. And we show: it does not need new laws.
Branson said that the risks that come with such a project as Libra are well known, for example, money laundering, customer protection, system stability. But the country already has regulations in place for all of these circumstances.
Other European Countries & Libra
Facebook’s cryptocurrency might have a possible green light from Switzerland but it remains in rather unfavorable position with other European countries. France for one has called for an outright ban on Libra. During an OECD conference dedicated to cryptocurrencies, the French economic minister Bruno Le Maire stated that Libra poses a considerable threat to financial security and stability in Europe.
In addition to France, Germany is resisting Facebook’s stable coin as well. According to reports by a German magazine Der Spiegel, Thomas Heilmann, a member of the Christian Democratic Union (CDU) party, shared that the government will not “allow market-relevant private stablecoins” to exist in the country.
Facebook projected that Libra would hit the market by 2020, which is only two months away and considering the global scrutiny that the crypto project has attracted, a delay in its launch is highly likely. Let’s see what exactly the fate of Libra turns out to be.