To determine if Facebook needs a banking license to roll out Libra, Britain’s outgoing finance minister has said that regulators and not lawmakers should make the decision. The official, Philip Hammond, also noted that the government of Britain will “engage” with the cryptocurrency and will not try to halt it, CNBC reported.
Hammond said lawmakers should not make the decision on whether it should be mandated that Facebook become a bank. He noted, according to the report, “That is an issue for the regulators. We have an independent regulatory system as you do and that is essentially an issue for the regulators to determine, not for politicians to determine.”
As far as Libra is concerned, Hammond said, “We’re not going to turn our back to it or try to stop it. We’re going to engage with it and try to work with others to ensure that it is effectively regulated.” Even so, Hammond noted that Facebook’s proposal could bring “great risk” into the financial system without the necessary scrutiny, as it could be used in money laundering or terrorism. The official also noted that he sees Libra as different from bitcoin as the two tokens have ownership structures that are contrasting.
Facebook’s digital token is reportedly being rolled out as a solution for the many people around the globe that don’t have access to banking services. It was also noted that the service could be a money market for the company that would probably compete with the remittance market.
The finance minister’s statements come as Bank of England (BOE) Governor Mark Carney said that Facebook’s newly-announced Libra digital currency can’t be the same unregulated type of service as Facebook. Carney said, according to reports, “The Bank of England approaches Libra with an open mind but not an open door.” He continued, “Unlike social media … the terms of engagement for innovations such as Libra must be adopted in advance of any launch.”