Tokyo (SCCIJ) – The Libra Association in Geneva, Switzerland, an organization backed by Facebook Inc. and some partners, has redesigned its digital currency unveiled ten months ago and applied for a payment system license in Switzerland. If successful, the move would confirm Switzerland as one of the top supporters of cryptocurrencies.
The Swiss Financial Market Supervisory Authority has its headquarters in Bern (© Finma)
Licensing begins
The Swiss Financial Market Supervisory Authority (FINMA) has confirmed that it received the application under the Financial Market Infrastructure Act (FMIA) based on an updated whitepaper. This marks the start of the licensing process under Swiss supervisory law. The outcome and duration of the procedure remain open, FINMA said.
With the proposed changes, the Libra association is responding to financial regulators who fear an undermining of central banks. From the beginning, the goal of the Libra project has been to enable a simple global payment system and financial infrastructure. But regulators, central bankers, elected officials, and various stakeholders were concerned about this approach to using blockchain technology to support a regulated, licensed payment system.
The logo of the Libra currency exists already (© Libra Association)
Global coordination
In particular, a popular coin backed by a basket of currencies would undermine the ability to manage fluctuations of a single currency. Thus, the Libra Association made changes to its initial approach, many of which depart from the approaches taken by other blockchain projects. It now plans to support multiple Libra “stablecoins”, with each working as a digital version of a country’s existing currency. In contrast to the initial intention, various Libra coins are directly connected to a regular currency such as the Japanese yen, the Euro, the dollar, or the Swiss Franken. But it still hopes to create a version of the Libra currency made up of “a digital composite of some of the single-currency stablecoins,” Libra said.
The changes may ease the way for more companies to join the association as members, Bloomberg reported. The group has added two new members since concluding its charter, including Shopify Inc., which provides e-commerce tools, and now has 22 in total, including Facebook. It also hopes to hire a chief executive officer by the end of the second quarter.
Due to the resistance of various central banks, some original high-profile participants left the organization before it signed a charter. They included Visa, Mastercard, and PayPal. For its new approach, the Libra Association needs mainly banks as partners to help manage the reserve funds for the new currency.
Global coordination
Libra Association now hopes to get started by the end of this year. But FINMA cautioned this optimism. The application filed would differ considerably from the project originally submitted. Also, FINMA would impose extra requirements for additional services that pose increased risks. This applies in particular to bank-like risks.
The Swiss financial regulator emphasized that the planned international scope of the project requires an internationally coordinated approach. Accordingly, FINMA has been in close contact with the Swiss National Bank and more than 20 other supervisory authorities and central banks from around the world since the start of its dealings with the Libra project.
Text: SCCIJ with material of Libra and FINMA
