Facebook crypto dreams on ice, will await regulations

U.S. Treasury warned Libra could be misused for a number of illicit activities

Facebook says partners providing financial services with Libra will be required to comply with anti-money laundering rules.
Facebook says partners providing financial services with Libra will be required to comply with anti-money laundering rules.

Facebook now says it will not proceed with the launch of its Libra cryptocurrency until regulatory concerns are addressed, Reuters reports.

The move comes a day after the U.S. Treasury secretary dramatically raised the stakes, saying Facebook’s proposed cryptocurrency Libra could be used by "money launderers and terrorist financiers" while terming the move by the social media giant “a national security issue”.

David Marcus, who oversees Facebook’s blockchain efforts, planned to tell US Congress today and tomorrow that “Facebook will not offer the Libra digital currency until we have fully addressed regulatory concerns and received appropriate approvals.”

U.S. Treasury secretary Steven Mnuchin joins a chorus of criticism and skepticism from policymakers across the world who cite concerns over data security, money laundering and consumer protections.

Days earlier, Federal Reserve Chairman Jay Powell expressed similar worries about the potential misuse of digital currency.

In a prepared testimony for US Congress, Marcus said the Libra Association, the companies behind the Facebook-led cryptocurrency, planned to register as a money services business with the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) and fully expected to comply with anti-money laundering and Bank Secrecy Act rules.

Marcus said partners providing financial services with Libra will be required to comply with anti-money laundering rules. The Libra Association will not hold personal data of users beyond basic transaction information, and personal information provided to Calibra, the digital wallet Facebook is developing to hold Libra, will not be shared with the social media company and cannot be used for targeting ads.

Marcus added that he expected the Swiss Federal Data Protection and Information commissioner to be Libra’s privacy regulator because the Libra Association is headquartered in Geneva. The association is also in preliminary talks with the Swiss Financial Markets Supervisory Authority on “an appropriate regulatory framework.”

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