It wasn’t enough that Facebook saw an immediate and global thrashing of its proposed Libra stablecoin; it then tried to rewrite the digital currency’s framework to make it more appealing. The idea of the social media giant with huge security issues getting into the money game isn’t finding a lot of support, but Facebook keeps on trying anyway.
After spending a decade attempting to gain entry into the e-money space, the company is looking to get things off the ground in a slightly different way, and has now applied for a financial license with the Swiss Financial Markets Supervisory Authority (FINMA).
To help it achieve its goal, Facebook-backed Libra has applied for a payment system license from Switzerland’s financial regulator. The company asserts in a statement that this is an “important milestone” for the Libra Association as it seeks to put Libra in motion and explains that all near-term operating expenses for the project have already been covered by the association’s founding members. The new, redesigned Libra will be a stablecoin that is backed by single currencies, a product that is almost completely different from the original concept.
Facebook adds, “Since the initial release of the Libra Association white paper in June 2019, the Libra Association has consulted and engaged with numerous global stakeholders and has incorporated key items of feedback into the design of the Libra payment system. This includes the ability of the Libra payment system to offer single-currency stablecoins in addition to the multi-currency Libra coin.
“Additionally, the Libra Association has adopted an open and competitive permissioned blockchain that foregoes the future transition to a permissionless system but maintains many of the economic and governance properties of the original design. Finally, the Libra Association has enhanced the safety of the Libra payment system with a robust framework for financial compliance and network-wide risk management, as well as strong standards for anti-money laundering, combating the financing of terrorism, and the prevention of illicit activities.”
Perhaps the logic is that, by securing a license for a financial payments platform, Libra will be able to show the world that it is able to take its responsibilities seriously. That’s going to be a difficult task, as Facebook and Libra continue to hit a brick wall. Changes to the business model aren’t going to go far to appease lawmakers, and U.S. Rep. Sylvia Garcia isn’t convinced that the Libra group understands the gravity of the situation.
Garcia, a member of the House Financial Services Committee, said, “Facebook and the Libra Association had an opportunity to address the concerns I and my other colleagues raised with their initial whitepaper. Unfortunately, they chose not to listen to the bipartisan concerns raised about Libra. I will continue to work to make sure that the SEC regulates any such asset as the security that it is under current securities laws.”
FINMA could approve the license application without too much difficult; however, it realizes that this is an issue with global implications. It said that it will discuss the request with regulators throughout the world, adding, “FINMA will give special consideration to whether strict national and international standards for payment infrastructures and also for combating money laundering can be upheld.”
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