The U.S. Federal Reserve plans to hold Facebook’s cryptocurrency, Libra, to high standards when it comes to consumer protection and regulation.
“Libra’s a new thing; we are looking at it very carefully,” said Federal Reserve Chairman Jerome Powell on Tuesday (June 25), according to Reuters. “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 revealed last week that it plans to launch its own digital currency next year. The company teamed up with Uber, Mastercard, Visa and others on the project.
“Authority for overseeing Libra is going to be in a number of places, but I think that the big picture is we are going to be looking really carefully at it,” said Powell.
The Fed won’t be the only regulator taking a close look at Libra. The international Financial Stability Board (FSB) and the U.K.’s Financial Conduct Authority (FCA) have both spoken publicly about the issue, joining the Bank of England (BoE) and the G7 in speaking out about the currency, and its need for regulation.
“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,” said FSB Chair Randal Quarles in a letter. “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. The FSB and standard setting bodies will monitor risks very closely and in a coordinated fashion, and consider additional multilateral responses as needed.”
The U.S. House Committee on Financial Services has scheduled a hearing to examine Facebook’s proposed cryptocurrency, and its impact on consumers, investors and the U.S. financial system. The Senate Banking Committee will hold its own hearing on the social media giant’s digital currency the day before. In addition, Committee Chairwoman Maxine Waters (D-CA) has already called for a moratorium on the crypto until lawmakers can investigate it further.