As Facebook plans to launch its own cryptocurrency, the Libra coin, governments have expressed doubts around whether the social media giant is adequately equipped to manage its own digital currency.
Facebook's plan has pushed cryptocurrency regulation up the agenda in Europe. Fears are that widespread use of Libra coin as an alternative means of transacting by Facebook's 2.4bn users could even disrupt the entire global financial system.
Germany's Finance Minister, Olaf Scholz has expressed his concerns. He says currency should not be owned by a private company, because it is part of what makes a sovereign state. Scholz does not want the Libra coin to be viewed as an alternative to the Euro and he has also warned it could help facilitate money laundering. Germany does not recognise cryptocurrency as a form of legal tender, and BaFin, the German financial regulator, has recently issued public warnings regarding the marketing of cryptocurrency.
Compared with some other European countries, Switzerland is highly crypto-friendly. It is one of the few countries to have regulation already in place. Its governments and authorities recognise the potential for economic growth that cryptocurrency and blockchain technology represent, making Switzerland a leader in this market.
France's financial regulatory body, the AMF has also recognised the need for greater regulation of cryptocurrency and is launching a new framework. It will be a voluntary code of practice covering tax mandates, capital requirements and consumer protection agreements. Cryptocurrency organisations would need to agree to it as a condition of regulatory approval. The AMF is currently in talks with several cryptocurrency exchanges, hedge funds and custodians regarding the proposed new regulatory measures.
The UK does not recognise cryptocurrency as legal tender, although it does have registration processes for the platforms it trades on. It doesn't have any laws around it, and is concerned about Facebook's proposals.
The FCA also expressed its concerns around the size of Facebook, and whether it is equipped to handle the level of responsibility needed to become a global online payments provider.
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