Going into the G20 summit, Facebook has been alerted by important regulators, which includes the Fed chief, that its plans for a worldwide cryptocurrency will face proper scrutiny.
The Libra coin is backed by a huge consortium of organizations and with Facebook’s over 2 billion users, crypto money might be set for a massive future.
However, Federal Reserve a chairman, Jerome Powell, has reiterated the warnings from regulators in Europe and from American lawmakers.
His words at an event sponsored by the Council on Foreign Relations, “We’re looking at it very carefully,”
“Given the possible scale of it, I think that our expectations from a consumer protection standpoint, from a regulatory standpoint, are going to be very, very high.”
Facebook has vowed that the fresh currency, set to launch in 2020, will reduce transaction costs and get more services to those that have zero access to the banks.
But that is not what these regulators are thinking, they believe Libra is a possible hindrance in the armory of international finance.
Chairman of the international Financial Stability Board, who is also a deputy to Jerome, Randal Quarles, tendered a report to the G20 leaders which highlighted the potential risk of crypto-asset being used for money laundering activities or even for sponsoring terrorists.
Randal said, “Though crypto-assets do not currently pose a risk to global financial stability, gaps may occur where crypto-assets fall outside the scope of regulators’ authority or from the absence of international standards,” he wrote in a letter to the leaders.
“A wider use of new types of crypto-assets for retail payment purposes would warrant close scrutiny by authorities to ensure that they are subject to high standards of regulation.”
There has been no response from Facebook on recent developments.