As Reuters reports, the Swiss Financial Market Supervisory Authority (FINMA) announced that the Libra Association requested a payment system license. While the Libra project, a stablecoin created for international payments, is under intense regulatory pressure, the decision to request a license may be a move to appease policymakers.
With news that several Libra Association founders may stop supporting Libra and a statement from Facebook that the project may be scrapped if regulatory pressure were to continue, the social media giant is fighting hard to bring its crypto project to the world. Now that the Association has formally requested a license, we may finally see some progress.
According to the Reuters report, the Association claims that they are in a constructive dialogue with FINMA and expect that their open-source blockchain network will become a regulated high-security payment system.
FINMA stated that additional requirements would be enforced upon the Association, due to the nature of the project. The financial watchdog added that, by issuing cryptocurrency tokens, Libra will be more than just a traditional payment system. The additional requirements would be that the FINMA could have a supervisory role concerning market risks, liquidity, the capital allocation for credit, and the overall management of the Libra reserve.
Adhering to the Financial Action Task Force’s (FATF) controversial June guidelines for digital assets, FINMA has recently decided to issue their guidelines which explained the regulatory process to blockchain-based services. While FATF’s new rules were already strict enough, FINMA decided to go beyond the recommended guidelines and refuse to free from obligation unregulated wallet providers.
On Tuesday, US Secretary of Terrorism and Financial Intelligence representative Sigal Mandelker stated that Libra must meet reasonably high standards for AML (Anti-money laundering) to successfully launch.
Mandelker also added that the same requirements should be imposed on all blockchain and cryptocurrency projects, whether it is Libra, Ethereum, or even Bitcoin. He additionally requested that the financial watchdog describes the status that Libra would eventually have under Swiss laws.
Will China launch its crypto project before Facebook does?
As the social media giant is working hard to reclaim its reputation and deliver a working and safe cryptocurrency asset, the Central Bank of China is already close to delivering their national cryptocurrency. The deputy director of the People’s Bank of China (PBoC), Ma Changchun, recently stated that the national cryptocurrency would be similar to Facebook’s Libra. According to the deputy director, the decision was made to protect China’s monetary sovereignty.
Changchun even claimed that the Central Bank’s solution would fare far better than a similar project from Tencent or Alibaba. He backed his claims by stating that the national cryptocurrency could be used offline as well, meaning that they would retain financial stability even in the case of a power outage. Tencent and Alibaba, on the other hand, don’t have these capabilities.
Several sources indicate that the cryptocurrency may be released as soon as on 11 November, which would mean that China would introduce its new currency before Facebook does, given that Libra is planned to launch in 2020. However, the national currency may not have a nation-wide launch, some sources claim.
Several recent information points to a direction where the cryptocurrency will be launched in Shenzhen first, before being available to the rest of China. At the start, only fintech giants such as Tencent, Alibaba, and Union Pay will be able to integrate the currency into their systems.
The information is partially confirmed given that there are a lot of new blockchain-related job positions available in Shenzhen. Despite recent developments, the situation remains uncertain as the race to launching a crypto mega-project may be delivered first by either the Eastern or Western hemisphere.