US: Facebook’s digital token being discussed with regulator

Facebook appears to be moving ahead with the launch of a digital currency, recently kicking off talks with the U.S. derivatives regulator.

The Financial Times, citing Christopher Giancarlo, head of the Commodity Futures Trading Commission, reported Ginacarlo said the Commodity Futures Trading Commission is in “very early stages of conversations” with Facebook. The commission is trying to understand if Facebook’s potential cryptocurrency would be under the oversight of the regulator. The report noted Facebook has been pushing ahead with plans to roll out a digital payments network that would let users send money to each other as well as purchase things on the platform. Customers would be able to engage in digital payments on Facebook, in Instagram and on WhatsApp, its mobile messaging platform. Facebook plans to roll out a stablecoin or a digital token that is attached to a fiat currency.

The Commodity Futures Trading Commission has the authority over futures and derivatives, which means that any financial instruments that are tied to Facebook’s coin — which is dubbed GlobalCoin — would be under its authority. Facebook has been reaching out to regulators and central banks to get guidance on a digital token. “We’re very interested in understanding it better,” Giancarlo told The Financial Times. “We can only act on an application, we don’t have anything in front of us.” The executive noted it’s too early to tell if GlobalCoin will be handled through futures or cash-based markets and who would get authority of it. The report noted that since Facebook’s digital token is backed by the U.S. dollar, there may not need to be a derivative linked to it.

The Financial Times said a concern that regulators will be looking at is whether Facebook can adhere to strict anti-money laundering and Know Your Customer rules. Currently, there is a crypto working group dubbed the U.S. Treasury’s Financial Stability Oversight Council which is looking at the issues surrounding digital assets and illegal activity with digital coins.