According to a Reuters report, a payment system license under Switzerland’s Financial Market Supervisory Authority (FINMA) is being sought by social media company Facebook for its planned digital coin project Libra.
Its choice to coordinate and get regulated by a regulatory framework with the Swiss watchdog was explained by the Libra Association which is registered in Switzerland as a a not-for-profit membership organization that was created to govern the Libra network.
“Switzerland offers a pathway for responsible financial services innovation harmonized with global financial norms and strong oversight. We are engaging in constructive dialogue with FINMA and are encouraged to see a feasible pathway for an open-source blockchain network to become a regulated, low-friction, high-security payment system,” said the Libra Association.
This summer, the FINMA has released required guidelines for regulation of payments that are made on the blockchain and the regulation is applicable to blockchain service providers including exchanges, wallet providers and trading platforms.
The intergovernmental Financial Action Task Force (FATF) issued the framework for digital asset regulation this June and the guidance by the FINMA is in line with that framework. The provisions also importantly include Money Laundering (AML) measures, Know Your Customer compliance, risk-monitoring systems among multiple other aspects of digital money and transactions.
The FINMA guidelines have however also included a provision for refusing to exempt payments that involve unregulated wallet providers from its oversight which is not included in the framework for by the FATF.
It is necessary that Facebook’s Libra project should comply with the highest standards for money laundering and preventing funding of terrorism through the platform if the Libra Association wants to get regulatory and legal approvals, a United States Treasury official had told reporters in Geneva earlier this week.
The choice had “nothing to do with evading regulations or oversight”, David Marcus — chief of Facebook’s Calibra wallet service had said at a hearing before US representatives in mid-July. He had argued then that the jurisdiction is an international hub hat makes doing business conducive.
Local financial regulators and government officials of Switzerland were met in August by US lawmakers in the European country and discussed their concerns and issues about Libra and had reportedly expressing their persistent “concerns […] with allowing a large tech company to create a privately controlled, alternative global currency.”
The monetary policy of Switzerland could be adversely affected in some cases and circumstances because of stablecoins pegged to foreign currencies, said the Swiss National Bank President Thomas Jordan on September 5.
(Adapted from CoinTelegraph.com)