Thursday 20 June 2019 9:44 am

Facebook cryptocurrency libra could pose regulatory problems, Bank of England deputy governor warns

Facebook’s plans to launch a new global cryptocurrency called Libra could raise regulatory issues, Bank of England deputy governor Sam Woods warned.

“It does seem clear that something like this could be very important from a regulatory point of view,” Woods told a financial conference in Brussels.

He added that regulators might have to think about the best treatment for this new asset class.

The social media giant on Tuesday published a white paper launching its cryptocurrency. Several major businesses including Visa, Uber and Paypal have backed the initiative.

Facebook’s head of libra David Marcus said the tech firm had already met with regulators, including the Bank of England. Libra had yet to receive a negative reaction, he said.

“Change is coming whether we do this or not,” Marcus told reporters on a call last week.

“The way that this is structured with large trusted companies from all around the world, and with compliance in mind, is a better alternative than some completely uncontrolled new digital currency being launched into the world.

“That’s also a reassuring fact for regulators that will have a lot of weight.”

Libra will be managed by an independent eponymous association made up of 28 initial founding companies. The firms were required to invest a minimum of $10m (£8m) in order to join.

Facebook is the biggest backer of the currency but all members of the Geneva-based association have equal voting rights.

The association hopes to have 100 partners by the time the currency fully launches in the first half of next year.

Libra will be built on a brand new open-source blockchain and backed by its own reserve.

The cryptocurrency will be tethered in order to reduce volatility, with the reserve supported by treasuries and central banks from the US, the UK, Europe, Japan, and Switzerland among others.