The Bank of England (BoE) has set out the rules of engagement that Facebook’s Libra cryptocurrency and other similar digital payment providers would have to satisfy before they can launch in Britain.
“Libra has the potential to become a systemically important payment system,” the BoE’s Financial Policy Committee (FPC) said in a policy statement released this morning.
Any such system would have to meet “the highest standards of resilience and be subject to appropriate supervisory oversight”, it said.
“The terms of engagement for innovations such as Libra must be adopted in advance of any launch,” the FPC continued. “UK authorities should use their powers accordingly.”
The principles established by the FPC include the need for demonstrable operational and financial resilience across the entire payment chain, and for providers such as Libra to provide enough information to regulators to monitor payments.
Facebook announced its Libra project in June this year, saying it will be a “global currency and financial infrastructure” powered by a version of blockchain – the technology that underpins bitcoin.
The project has received widespread backlash from politicians and regulators, with the European Central Bank warning that Libra – which would dwarf other cryptocurrencies such as bitcoin – could limit its powers to set monetary policy.
The European Union said yesterday it will propose a new law covering crypto-asset projects like Libra, which it considers a risk to financial stability. The bloc currently has no specific regulations on cryptocurrencies.
City A.M. has contacted Facebook for comment.
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