Regulators in Japan have expressed concern about Facebook’s cryptocurrency plans, becoming the latest financial regulator to cast doubt on the proposals.
The social media giant’s stablecoin, known as Libra, is to be backed by a portfolio of government instruments and fiat currencies, and is designed to hold a stable value to minimize exchange risks.
However, the Bank of Japan, the country’s central bank, said Libra would be difficult to regulate, and ultimately posed risks to the global financial system, Nikkei Asian Review reported.
Sources close to the bank told the news outlet there were concerns Libra would take payment completely outside of mainstream payment infrastructure, and into an entirely “virtual world,” saying, “It will move money into an absolutely virtual world, so it is completely different than other forms of digital payment.”
Furthermore, the bank suggested that by pegging the cryptocurrency to a basket of fiat currencies, Facebook could be attempting to avoid the scrutiny of any one single regulator or central bank.
The bank’s governor, Haruhiko Kuroda, said the Bank of Japan would keep a close eye on developments with Libra, and on whether cryptocurrencies in general continue to gain traction for payments worldwide.
The objections from the Bank of Japan chime with similar views expressed by regulators worldwide in recent weeks.
Authorities in France, the U.K., the U.S. and elsewhere have already criticized the proposals on similar grounds, with French opposition particularly vociferous.
Yet as far as Facebook is concerned, the company is continuing to liaise with regulators worldwide, in an attempt to reach what some have called an impossible multi-jurisdictional compliance effort.
Lawmakers in the U.S. have taken their criticisms a step further. In an open letter, Democrats in the House of Representatives called on Facebook to abandon their plans altogether:
“It appears that these products may lend themselves to an entirely new global financial system that is based out of Switzerland and intended to rival U.S. monetary policy and the dollar. This raises serious privacy, trading, national security, and monetary policy concerns for not only Facebook’s over 2 billion users, but also for investors, consumers, and the broader global economy.”
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