Facebook’s fledgeling cryptocurrency will raise questions for both society and government that need close examination, a senior official at Britain’s financial watchdog said on Tuesday, in another sign that the planned project will face deep scrutiny.
Facebook Inc unveiled its Libra digital coin last month, raising immediate concerns over its potential impact on privacy from lawmakers and regulators around the world.
Libra’s “size and scale will pose questions for society and government more generally about what is acceptable and desirable in this space,” Christopher Woolard, executive director of strategy and competition at the Financial Conduct Authority.
“Historically, this may have been a sector that has lived by the mantra of ‘move fast and break things,’ but the issues raised here require deep thought and detail,” Woolard told a conference at the University of Cambridge, according to remarks posted on the FCA’s website.
Facebook will likely face unprecedented regulatory scrutiny over Libra, planned for launch by the end of June 2020. The coin would mark the social media giant’s entry into one of the least-regulated areas of finance.
The response of domestic and international financial regulators and monetary authorities to the Libra project will have a crucial impact on its prospects.
Though some, including the FCA, have said they have met Facebook to discuss the project, there are still many questions over exactly how it will operate. Libra faced mounting attention last week as European central bankers and regulators demanded greater detail on the project.
Crucial decisions on such projects lie with lawmakers, the Bank for International Settlements (BIS), an umbrella group for central banks, has warned. Politicians need to quickly coordinate regulatory responses to new risks as Facebook and other tech firms move into finance, the BIS said last month.
In general, the FCA looks at any so-called crypto asset – a catch-all term that includes bitcoin and other digital tokens – on a case-by-case basis, Woolard said. It asks questions on whether it would benefit competitive markets and consumers, or cause harm by raising complexity and other risks, he added.
“It is crucial that we also think about the reality – the technical details, the technology; and the legal position.”