Swiss Regulator Weighs Risks and Opportunities in Facebook Libra, France Wants to Block Libra Use In Europe

At the time of announcing its Libra project, Facebook said that it will execute the project from Geneva, Switzerland. However, to make the Libra project globally viable, Facebook will need regulatory permissions from different countries.

Currently, the Swiss financial regulator - Financial Market Authority (FINMA) - is weighing all the risks and opportunities involved with Facebook’s Libra Project. In an interview with local news publication Neue Zuercher Zeitung, FINMA chief Mark Branson said that they are closely observing the developments and need to make sure that the Libra project amends to all the existing rules and laws before getting the regulatory approval.

The FINMA chief said: “High finance can bring reputational risks. This is true everywhere in the world. But I have a hard time thinking that Switzerland should become a second-rate financial center just to avoid such risks. The decisive factor is whether Switzerland has credible regulation and supervision as well as appropriate framework conditions for large players.”

However, looking to the positive side, he said that Facebook has tried to decentralize this project by having 28 different “successful and huge corporations” as the members of Libra Association, the controlling body of the Libra cryptocurrency project.

He further added that Switzerland alone cannot take any decision on a global project of such a huge scale. He said that it is very important to have co-ordination among international regulators.

The Libra Association has said that it will take every care to address money laundering and other regulatory concerns. It said: “The Libra Association will maintain AML guidelines, which its members will be expected to comply with if they choose to provide financial services on the Libra network”.

The association further added: “It [The association] will set standards for its members to maintain AML and anti-fraud programs, and to cooperate with legitimate law enforcement investigations. It will be the responsibility of developers building on the Libra Blockchain to comply with the laws and regulations in the jurisdictions in which they operate.”

But in another setback to the company, the finance minister of France said that Facebook’s Libra poses threat to the sovereignty of national cryptocurrencies and so it won’t allow the project to function in Europe.

Speaking to The Independent newspaper, Bruno Le Maire, Economy and Finance Minister of France, said: “I want to be absolutely clear: In these conditions, we cannot authorize the development of Libra on European soil.”

Speaking to The Telegraph, Le Maire further added Libra can cause major financial disruption by “substituting itself as a national currency”. He said: “It would be a global currency, held by a single player, which has more than two billion users around the world. The monetary sovereignty of states is under states is under threat.”

“I don’t see why we should dedicate so much effort to combating money laundering and terrorist financing for so many years to see a digital currency like Libra completely escape those regulatory efforts,” he added.