For a long time it was quiet around the planned stable coin social media company Facebook. Now the Geneva-based Libra Foundation is back with a revised whitepaper and a FINMA application for a licence to be considered payment system.
As can be seen from the announcement on the Association’s blog, the project wants to support central banks in the future, in their development of central bank digital currencies (CBDC’s). Efforts are being made to bring blockchain technology inline with recognized regulations. The updated white paper provides an overview of the categories of network participants, including virtual asset service providers (VASP’s).
The new Libra whitepaper assumes a payment system that interacts via VASPs, such as custodial wallets and crypto exchanges. Originally, the whitepaper was still aimed at a permissionless system, which provided for disinter-mediate processing. Also, a “comprehensive system at network level to combat money laundering (AML), to combat the financing of terrorism (CFT) and to enforce sanctions” was to be implemented.
Additional single currency stable coins in the revised Libra whitepaper
Since the harsh headwind from regulators and politicians around the globe, the Libra Association has had to respond. At that time, due to regulatory pressure, additional key partners had pulled out of the crypto-currency project. Since June, talks have been held with political decision-makers around the world to determine a suitable plan for the gradual introduction of Libra.
At present, it is emphasized that the Libra Project is designed as a globally accessible and cost-effective payment system – as a supplement, not a substitute for domestic currencies. In this respect, the Association attests to the scope of responsibility of the respective public sectors.
In addition to the originally planned Libra, which is to have a basket of currencies as a basis, stable coins for individual currencies are also to be developed. Thus, currencies such as USD, EUR, or GBP could be introduced as stable coins under the Libra project. This concept was already hinted at in October by Libra Project Manager Marcus.
Start of the FINMA approval process
In addition, the Swiss Financial Market Supervisory Authority FINMA has received an application from the Libra Association for authorization as a payment system. This now marks the start of the authorization process under Swiss supervisory law. The outcome and duration of the process is yet to be decided.
FINMA has issued an announcement stating that the application submitted differs significantly from the project originally submitted (see link). For example, the Libra payment system will now include not only a stable coin, which will be backed by several currencies, but also stable coins backed by a single currency. FINMA will now analyze the application in detail and, as provided for in the FinfraG, impose additional requirements for risk-increasing services.
FINMA points to the planned international scope of the project, which makes an internationally coordinated approach indispensable. Accordingly, FINMA has been in close and regular contact with the Swiss National Bank and more than 20 supervisory authorities and national banks around the world since the start of its supervisory involvement in the Libra project.