October 1, 2022

Facebook Libra cryptocurrency must comply with regulatory requirements

Facebook Libra cryptocurrency must comply with regulatory requirements

The head of the US Federal Reserve, Lael Brainard, said that the cryptocurrency project Libra from the social network Facebook must comply with regulatory requirements in order to guarantee the financial security of consumers.

December 18 at a conference in Germany Brainardsaid Facebook representatives are required to provide accurate information about the Libra exchange rate stability system. In particular, she wants to learn about reserve management methods, rights and obligations of network participants. The Libra Association organization, which will manage the blockchain, said that the price of the Libra coin will be provided with currency reserves: dollars, euros, yens, pounds sterling and Singapore dollars.

However, Brainard believes that owners of a digital asset may suffer losses:

If the Libra project is implemented, then it cansplit, since the system will consist of two elements: a network of active users representing more than a third of the world's population, and a private stablecoin, whose rate will be tied to a basket of fiat currencies. The degree of price risk that consumers may face is unknown, as they will not have rights to own assets that provide the value of the coin.

Lael claims that global billingFacebook’s system needs to implement robust user protection mechanisms. As an example of an exemplary model, she cited the rules in force in banks that have been developed and tested over several decades. According to Brainard, the Libra leadership is faced with the task of resolving all existing legal and regulatory issues prior to the issue of cryptocurrency.