ZURICH/LONDON (Reuters) – Facebook’s (FB.(O) Scale cryptocurrency suffered another setback on Wednesday, when Switzerland said that the proposed settlement, the payments may be, you are faced with a number of strict rules that usually apply in banks, at the top of the heavy-duty, anti-money laundering legislation.
FILE IMAGE: Representations of virtual currency are to be displayed on the front of the monitor the logo in this illustration picture the 21 of June, 2019 at the latest. REUTERS/dado Ruvic/File Photo
The world’s largest social media network, announced plans in June to launch the new currency, as it expands into e-commerce, but the Scale has come under fire from regulators around the world fear could destabilise the global financial system.
The statement by the swiss financial market regulator FINMA as the Scale’s Association, which is headquartered in Geneva, said it planned to apply for a license and the payment system in the country.
FINMA, said that the project would have to be more than just a global system of payments and would therefore be subject to the additional requirements of liquidity and of capital allocation for the risk management of the reserves, which are digital tokens.
“For a bank-like risks, for example, a bank-like regulatory requirements, it would have been,” FINMA said in a preliminary assessment of the project on the basis of the information that is available so far.
A spokesman said the Scale is said to obtain clarity on how the new digital currency should be regulated in Switzerland and it was the key to the project is the development of the FINMA guidance, “now, what is the Scale, the ecosystem is, and what it isn’t”.
In order to avoid the volatility that plagues the cryptocurrencies, such as bitcoin, and the balance will be backed by a pool of assets, including bank deposits and short-term government securities, which will be taken by the network administrator.
FINMA said the risks and returns associated with such reserve, shall be entirely for the account of the balance of Association and not of the digital currency holders.
Libra wants to be launched in June 2020, but the project has drawn continued criticism from politicians and regulators around the world are concerned about the impact on the financial system, and the privacy of its users and its potential for use in money laundering.
“The highest international anti-money laundering standards, and would need to be ensured throughout the entire eco-system of the project,” FINMA said in a statement.
The Swiss authority, said the broader questions relating to taxes, competition, and the protection of the data that will be created by Facebook, it’s time to Scale, it would fall outside the scope of the contract.
Even if FINMA were to get the project the green light, and it is not yet clear whether this would comply with the authorities in other jurisdictions as well.
The Group of Seven advanced economies, warned in July that it would not let the monitor do this until all legal issues have been resolved, saying that there was a lengthy discussion about the project in the first place, it may be required.
When Facebook announced its plans to Scale back in June, politicians and regulators in the United States and other major economies, and almost immediately, concerns had been expressed about it, a digital currency pegged to Facebook’s 2.4 million monthly active users.
“Greater clarity about the regulation path, in Switzerland, which is the key for the association for the development and will be informed by our discussions with regulators in other markets as well,” Dante Disparte, the Scale, the Association’s head of policy and communications, said in a comment e-mail to Reuters ‘ questions.
“The Scale of currency is simply a proxy for a critical system that has a low friction coefficient and a high of confidence,” he said.
In a sign of the increased control in how Switzerland’s handling of the inquiry, a senior u.s. Treasury official said on Tuesday, in the Swiss capital, Bern, is that the Scales must meet the highest standards in the fight against money laundering and the financing of terrorism, as it is to get off the ground.
United states Under Secretary of Terrorism and Financial Intelligence, Sigal Mandelker told the reporters that it was for a cryptocurrency project, including the Scale, which operates in the United States of america, it would have to be clear as to conform to the AMERICAN standards.
“Whether it’s bitcoin, Ethereum, the balance, the message is always the same: to meet all of the following companies: anti-money laundering and combating the financing of terrorism, should be incorporated into the design from the get-go,” Mandelker said.
The head of the world anti-money laundering watchdog the Financial action task force told Reuters it was monitoring the bathroom Scale developments, while a delegation from the US Congress met with members from Switzerland, to talk about the cryptocurrency.
“FINMA itself will also be under pressure,” said Ronald Kogens, an attorney specialising in cryptocurrencies and the blockchain to Froriep, a law firm in Zürich, switzerland. “Everyone outside of Switzerland, would show that the project is well organized in the netherlands.”
Apply for a payment systems license, usually for eight to 12 months, the Kogens said, and that may have an impact on Facebook, it is planned to be launched date.
“I think it’s most likely the start date will be delayed,” he said.
Report by John Miller, and Brenna Hughes Neghaiwi in Zurich, and Tom Wilson in London; editing by John O’donnell and David Clarke