WASHINGTON (Reuters) – Facebook Inc said on Monday it would not proceed with the launch of its Libra cryptocurrency until regulatory concerns are addressed, as the U.S. Treasury secretary took the unusual step on of saying he had serious concerns it could be used for illicit activity.
David Marcus, who oversees Facebook’s blockchain efforts, planned to tell Congress that Libra is not being built to compete with traditional currencies or interfere with monetary policy.
“The Libra Association, which will manage the (Libra) Reserve, has no intention of competing with any sovereign currencies or entering the monetary policy arena,” Marcus was due to say on Tuesday, according to prepared testimony released by the Senate Banking Committee. “Monetary policy is properly the province of central banks.”
“Facebook will not offer the Libra digital currency until we have fully addressed regulatory concerns and received appropriate approvals,” he said.
Speaking with reporters, Mnuchin said he was not comfortable with Libra currently, particularly in guarding against money laundering and other illicit use.
“They’re going to have to convince us of very high standards before they have access to the U.S. financial system,” he said.
Mnuchin is the latest senior U.S. regulator to air concerns with the product, days after Federal Reserve Chairman Jay Powell expressed similar worries about the digital currency could be misused.
“These cryptocurrencies have been dominated by illicit activity and speculation,” said Mnuchin.
In his prepared testimony, Marcus said the Libra Association, the companies behind the Facebook-led cryptocurrency, planned to register as a money services business with the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) and fully expected to comply with anti-money laundering and Bank Secrecy Act rules.
Since announcing the Libra project last month, Facebook has faced a torrent of criticism and skepticism from policymakers across the world who cite concerns over data security, money laundering and consumer protections.
Marcus was scheduled to testify on Tuesday and Wednesday before congressional committees overseeing financial issues and several members have suggested the product be barred.
Addressing some of those concerns, Marcus said in his prepared testimony that partners providing financial services with Libra will be required to comply with anti-money laundering rules. The Libra Association will not hold personal data of users beyond basic transaction information, and personal information provided to Calibra, the digital wallet Facebook is developing to hold Libra, will not be shared with the social media company and cannot be used for targeting ads.
Marcus added that he expected the Swiss Federal Data Protection and Information commissioner to be Libra’s privacy regulator because the Libra Association is headquartered in Geneva. The association is also in preliminary talks with the Swiss Financial Markets Supervisory Authority on “an appropriate regulatory framework.”
While promising Libra will adhere to relevant laws and regulations, Marcus aimed to sell lawmakers on the product’s merits as well, arguing the United States should not stifle such innovation.
“I am proud that Facebook has initiated this effort here in the United States,” his testimony said. “I believe that if America does not lead innovation in the digital currency and payments area, others will. If we fail to act, we could soon see a digital currency controlled by others whose values are dramatically different.”
Reporting by Pete Schroeder and Katanga Johnson; editing by Jonathan Oatis and Cynthia Osterman
WASHINGTON (Reuters) – Facebook Inc mentioned on Monday it might not proceed with the launch of its Libra cryptocurrency till regulatory issues are addressed, as the U.S. Treasury secretary took the bizarre step on of claiming he had severe issues it might be used for illicit exercise.
David Marcus, who oversees Facebook’s blockchain efforts, deliberate to inform Congress that Libra is just not being constructed to compete with conventional currencies or intrude with financial coverage.
“The Libra Affiliation, which will handle the (Libra) Reserve, has no intention of competing with any sovereign currencies or getting into the financial coverage enviornment,” Marcus was as a result of say on Tuesday, in accordance with ready testimony launched by the Senate Banking Committee. “Financial coverage is correctly the province of central banks.”
“Facebook will not supply the Libra digital currency till we now have absolutely addressed regulatory issues and obtained applicable approvals,” he mentioned.
Talking with reporters, Mnuchin mentioned he was not comfy with Libra at the moment, significantly in guarding in opposition to cash laundering and different illicit use.
“They’re going to must persuade us of very excessive requirements earlier than they’ve entry to the U.S. monetary system,” he mentioned.
Mnuchin is the most recent senior U.S. regulator to air issues with the product, days after Federal Reserve Chairman Jay Powell expressed related worries in regards to the digital currency might be misused.
“These cryptocurrencies have been dominated by illicit exercise and hypothesis,” mentioned Mnuchin.
In his ready testimony, Marcus mentioned the Libra Affiliation, the businesses behind the Facebook-led cryptocurrency, deliberate to register as a cash providers enterprise with the Treasury Division’s Monetary Crimes Enforcement Community (FinCEN) and absolutely anticipated to adjust to anti-money laundering and Financial institution Secrecy Act guidelines.
Since asserting the Libra undertaking final month, Facebook has confronted a torrent of criticism and skepticism from policymakers internationally who cite issues over information safety, cash laundering and shopper protections.
Marcus was scheduled to testify on Tuesday and Wednesday earlier than congressional committees overseeing monetary points and a number of other members have instructed the product be barred.
Addressing a few of these issues, Marcus mentioned in his ready testimony that companions offering monetary providers with Libra will be required to adjust to anti-money laundering guidelines. The Libra Affiliation will not maintain private information of customers past primary transaction data, and private data supplied to Calibra, the digital pockets Facebook is creating to carry Libra, will not be shared with the social media firm and can’t be used for focusing on adverts.
Marcus added that he anticipated the Swiss Federal Knowledge Safety and Data commissioner to be Libra’s privateness regulator as a result of the Libra Affiliation is headquartered in Geneva. The affiliation can be in preliminary talks with the Swiss Monetary Markets Supervisory Authority on “an applicable regulatory framework.”
Whereas promising Libra will adhere to related legal guidelines and rules, Marcus aimed to promote lawmakers on the product’s deserves as properly, arguing america mustn’t stifle such innovation.
“I’m proud that Facebook has initiated this effort right here in america,” his testimony mentioned. “I consider that if America doesn’t lead innovation within the digital currency and funds space, others will. If we fail to behave, we may quickly see a digital currency managed by others whose values are dramatically totally different.”
Reporting by Pete Schroeder and Katanga Johnson; modifying by Jonathan Oatis and Cynthia Osterman