Facebook’s Libra To Apply For Licence In Switzerland

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Swiss financial regulators have signaled that Facebook’s cryptocurrency, Libra is mandated to meet up to extra requirements besides acquiring a payment system license before they can begin operations in the region.

In a recent press release, the Swiss Market Supervisory Authority (FINMA) explained that the diverse services projected by Libra have created the need for adding the requirements being imposed. They stated that due to the issuance of payment tokens by Libra, the operations planned by Libra would clearly exceed those of a pure payment system and therefore should be subjected to such extra requirements.

The Extra Regulatory Requirements
According to FINMA, the extra requirements would be targeted specifically at liquidity, risk concentration and capital allocation.

The financial regulators of Switzerland have also noted that the management of Libra is another element necessitating the demand for Facebook to meet extra requirements concerning its cryptocurrency initiative.

In the launch of the Libra white paper in June, Facebook noted that the reserve would be controlled by a web of custodians who would be spread across different geographies. The so-called custodians will be mandated to possess an investment-grade credit rating.

Also, Facebook noted that the real assets used to back the Libra cryptocurrency would be a selection of low-risk assets such as bank deposits and government securities.

 

What Form Will these Extra Libra requirements take?

According to FINMA, the extra regulatory requirements that Libra would have to meet would be nothing different from what other participants in the financial markets have to adhere to.

For example, Libra would be expected to be exposed to certain bank-like rules such as a large simultaneous number of withdrawals of Libra coin by users would have to be palliated by the application of certain bank-like regulatory requirements. This means that Facebook would be required to obtain a banking license. This idea has been pushed for in the past by U.S. President, Donald Trump.

FINMA also mentioned that Libra’s international range will mandate a globally coordinated approach. This new development would drastically delay the launch of the cryptocurrency.

 

U.S. Pressures Switzerland over Libra Cryptocurrency
Switzerland is under intense pressure from the United States to ensure that its cryptocurrency regulations are not prone to misuse. Facebook chose the Central European nation as its hub because of the country’s progressiveness towards FinTech.

According to a report by the Wall Street Journal, officials from Switzerland and U.S. Held a meeting in Switzerland earlier this week, where they discussed matters surrounding the new cryptocurrencies regulations.

The U.S Undersecretary of the Treasury for Terrorism and Financial Intelligence, Sigal Mandelker, emphasized his concerns over the need to have regulations strong enough to fend off bad actors. He mandated that the Swiss handle these concerns with all importance.

 

Source: https://learn2.trade

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