Libra Association, responsible for the digital coin unveiled by Facebook last year, has applied for a payment system license from the Swiss Financial Market Supervisory Authority (FINMA), with significant changes made to the project that was met with widespread criticism last year.
The Libra Association has announced that it has formerly commenced the process for obtaining a payment system licence in Switzerland, which will have input from central banks and other regulatory bodies.
In a separate statement, FINMA confirms receipt of the Libra Association’s application, submitted under the Financial Market Infrastructure Act (FMIA) on the basis of an updated white paper.
Most significantly, Libra now intends it payment system to support single-currency stablecoins in addition to the multi-currency token itself.
The Libra Association stresses that it has engaged with its stakeholders, incorporating their feedback into the design of the payment system, and that it has enhanced the system’s safety with finance industry-level framework for compliance and risk management.
The much-maligned stablecoin project describes this as an “important milestone” as it moves forward to to an operational phase.
Facebook’s announcement of the Libra project in June 2019 was met with disapproval from governments, regulators and financial institutions who were clearly concerned by the prospect of a company of Facebook’s stature openly seeking to disrupt the global financial system.
Facebook founder Mark Zuckerberg attempted to defend the project in front of Congress in October, stressing that the Libra Association would work with regulators in bringing the project to fruition and warning that the US risked ceding dominance of the financial world if it did not act on the potentials of digital currencies soon.
The criticism that Libra drew saw a number of its founding partners, including Visa, Mastercard, PayPal and Stripe all quit the project soon after.
The Libra Association is now attempting to make good on Zuckerberg’s words, rowing back from its ambitions to create a single global currency pegged to a basket of fiat currencies and government debt.
This may prove an attractive incentive for central banks and governments currently exploring launching their own digital currencies, who may have realised the benefits of harnessing a company like Facebook’s technological prowess and global reach.
The model most in favour appears to be leaning to is a “hybrid” approach, which involves central banks issuing the currency to commercial banks who act as intermediaries in circulating it to consumers, while also handling customer service, KYC and AML and so on.
This approach would demand a complex technological infrastructure, meaning central banks may look at utilising Libra’s rails for their digital currencies, particularly in light of today’s announcement.