Picture: DADO RUVIC
Picture: DADO RUVIC

London — Facebook's fledgling cryptocurrency faced mounting scrutiny on Tuesday as European central bankers and regulators demanded more detail on the social media giant’s Libra project.

Britain’s top financial regulator said there is not yet enough information to understand Libra. It said the project could be significant for public policy and will not easily get the go-ahead without further disclosure.

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“They are not going to walk through authorisation without that,” Andrew Bailey, CEO of the Financial Conduct Authority, told members of a parliamentary committee.

Facebook announced plans last week to launch Libra in the first half of 2020 in its effort to expand beyond social media to e-commerce and digital payments.

Cryptocurrencies such as bitcoin remain one of the least-regulated areas of finance. The response of domestic and international financial regulators and monetary authorities to the Libra project will have a crucial effect on its prospects.

Facebook’s project raised concern about privacy among US legislators, prompting  European central bankers to claim oversight to ensure it would not jeopardise the financial system or be used to launder money.

Until now, global central bankers have largely refrained from regulating digital currencies, concluding in 2018 they are too small to pose a risk to the financial system.

 Bailey said the watchdog has been in contact with Facebook, and that many more engagements could be expected. 

Domenico Gammaldi, the Bank of Italy’s head of market and payment system oversight, called for more  information. “The white paper, that means ‘white’ without any information,” Gammaldi said at the Crypto Valley Conference in Zug.

Play by the rules

Bank of France governor Francois Villeroy de Galhau said Libra will have to respect regulations against money laundering, and its backers will have to seek a banking licence to offer services such as deposits.

France is using its year-long presidency of the Group of Seven nations (G7) to set up a task force to tackle such concerns at an international level.

Other central bankers were more sanguine about the project for which Facebook has recruited 28 partners including Mastercard, PayPal and Uber to form the Geneva-based Libra Association to govern the cryptocurrency.

“I think it’s an interesting development and I’m pretty relaxed about it,” said Thomas Moser, an alternate member of the Swiss National Bank's governing board.

“They have clearly indicated that they are willing to play according to the rules, they have been contacting the regulators,” Moser said at the Crypto Valley Conference.

The Bank for International Settlements, an umbrella group for central banks, said on Sunday that greater political co-ordination is needed to deal with the entry into finance of major tech companies such as Facebook.

Reuters