According to David Marcus, the association that will issue the Libra token will be supervised by FINMA.
This is what can be read in the document published on the official website of the Senate Committee on Banking, regarding the testimony of the head of the Libra project and CEO of the Facebook company Calibra, which will manage the wallets and transactions of the stablecoin.
Today, Marcus was summoned to a hearing by the Senate Committee on Banking, and his testimony was summarised in the official document referred to above.
During his testimony, he said:
“The Libra Association expects that it will be licensed, regulated, and subject to supervisory oversight. Because the Association is headquartered in Geneva, it will be supervised by the Swiss Financial Markets Supervisory Authority (FINMA). We have had preliminary discussions with FINMA and expect to engage with them on an appropriate regulatory framework for the Libra Association. The Association also intends to register with FinCEN as a money services business”.
The Swiss FINMA was one of the first official authorities to recognise cryptocurrencies and to categorise the various types of tokens.
It is likely that the Libra token will fall into the category of payment tokens, but given the fiat currency reserve to which the value will be anchored, it could also be categorised as a security token.
It cannot be ruled out that FINMA may also require the association to provide some form of deposit guarantee or even a banking licence.
In addition, according to Swiss law, all data must be stored on servers that comply with strict Swiss regulations, so the association could be expected to perform considerable work in order to meet all the necessary requirements.
Marcus also specified that the launch of Libra is designed to be a long, open process and subject to regulatory oversight and review.
“Facebook will not offer the Libra digital currency until we have fully addressed regulatory concerns and received appropriate approvals”.
On the subject of monetary policy, he said:
“The Libra Association, which will manage the Reserve, has no intention of competing with any sovereign currencies or entering the monetary policy arena. It will work with the Federal Reserve and other central banks to make sure Libra does not compete with sovereign currencies or interfere with monetary policy”.
Furthermore, Marcus specified that Libra will commit itself in supporting all the efforts of regulators, central banks and legislators to contribute to the fight against money laundering, terrorist financing, and other illegal activities, specifying that a digital network with appropriate KYC practices, combined with the possibility for law enforcement agencies to conduct their own analysis of the blockchain, will increase the effectiveness of the monitoring of financial crimes compared to, for example, the use of paper banknotes.
In this respect, Libra will use AML policies and procedures, including those of the Bank Secrecy Act, to combat the financing of terrorism.
Marcus also says that consumer protection and user privacy are real priorities for the Libra association, although he does not add any details that would make it clear how they intend to proceed in this regard.
Privacy on the Libra blockchain will be substantially similar to that of existing blockchains because transactions will include only the public addresses of the sender and recipient, the amount of the transaction and the timestamp.
As such, the association will not store any personal data of users, although Calibra and any other payment gateways that will use this token will be required to do so.
“We expect that the Calibra wallet will ultimately be one of many services, and one of many digital wallets, available to consumers on the Libra network”.
He also promised that the financial information collected by Calibra will not be shared with Facebook, “unless people agree to permit such sharing”, but he did not specify how they intend to guarantee it and make it verifiable.