Facebook’s crypto initiative is now facing a setback in Switzerland as the Swiss market regulator on Wednesday warned that Libra would face strict scrutiny for its approval, Reuters reported.
This came after the social media company announced that it is seeking a license from the Swiss Financial Market Supervisory Authority (FINMA) to operate as a regulated payments system.
“For bank-like risks, for example, bank-like regulatory requirements would apply,” the regulator stated. “The highest international anti-money laundering standards would need to be ensured throughout the entire ecosystem of the project.”
A crypto to ease cross-border payments
Facebook announced its plans to launch a digital currency in June and is aiming to bring it to the masses by next year. To oversee its upcoming currency, it set up a non-profit, The Libra Association, in Geneva and partnered with 27 tech and payment companies.
In a hearing before US lawmakers, Libra’s head David Marcus clarified that the social media company would seek approval from Swiss regulators for Libra as the European country is the base for its crypto project.
However, Libra’s attempt to get the payment license has now attracted the attention of the Swiss regulator, which earlier was not vocal about the project.
“If a financial center has ambitions, it must be able to live with attention,” Mark Branson, head of FINMA, told The New Zurich Times in an interview.
Addressing the hostility of global regulators towards Libra, Branson added: “A project of such a global dimension can be addressed only via international coordination and consultation with other supervisors and regulators…It is illusory to believe a single country can regulate and oversee a project like Libra on its own. The supervision of UBS or Credit Suisse also does not take place in complete isolation.”
He also pointed out that the Swiss regulator would focus on minimizing money laundering with the crypto.
“New technologies can also bring benefits in the fight against money laundering, for example, if traceability of transactions becomes fully available. So there are risks and opportunities,” Branson added.