A report from Reuters on September 12 state that Facebook is requesting a payments systems license from the Swiss Financial Supervisory Monetary Authority (FINMA) for Libra.
Facebook has come under intense scrutiny over the past few months at almost every stage of development. Recently, US regulators also made a trip down to Switzerland to meet with related Swiss financial bodies to further understand Libra’s operations and plans in the country.
All blockchain and crypto projects, including its affiliated service providers, are subject to Switzerland’s financial market regulations, and the license is mandatory under the Money Laundering Prevention Act. The application process for the license will take eight to twelve months. Libra’s current project roadmap plans for a 2020 official launch of the cryptocurrency and global payments system, but FINMA’s application timeline may lead to a delay in Libra’s plans.
Moreover, FINMA is taking a cautionary approach towards Libra as it is also under international scrutiny to ensure that the project is secure and held accountable to its users without threatening global financial markets. This is because Libra is “more than just a global payments system and would therefore be subject to extra requirements”, especially in the areas of risk capital allocations, liquidity and reserves management.
To prevent price fluctuations, Libra will be supported by assets such as bank deposits or short-term government bonds with reliable intermediary management.
Despite being registered in Switzerland, as the social media giant is still under the purview of the United States, it still has to comply with US regulatory requirements.