Who studied what? Or a fairy tale about Libertatem

Алина Валамат-Заде Алина Валамат-Заде Expert of Club Russia-OECD published in Digital economy
Who studied what? Or a fairy tale about Libertatem

Facebook plans to launch its own cryptocurrency Libra in 2020. In its press release, Facebook states that "even basic financial services are still not available to many: almost half of the world's adults do not have an active bank account," and that "migrants lose $5 billion each year to transfer fees. Now, thanks to Libra, it will be possible to transfer funds to each other with a much lower commission, unlike systems such as Western Union, for example. Transactions will be managed and approved by the Libra Association, which includes companies such as Mastercard, Visa, eBay, PayPal, and many others, each of which has paid at least $10 million in membership fees.

In an interview with the radio station "Kommersant FM", the Chairman of the State Duma Committee on the financial market Anatoly Aksakov suggested that the use of Libra as a payment instrument will be prohibited. Since Facebook said that it will comply with the recommendations of the FATF, as well as the laws of each jurisdiction in which it will provide the cryptocurrency, Russia, in our view, is not affraid (and there is no question of its objectivity) of the cryptocurrency itself, but rather of the inability to build regulatory relations with international companies, as it has already happened with Telegram. Such relations should be built on a substantive issue - a joint definition of the rules of turnover of the new Facebook tool on the territory of Russia. This requires certain competence from the Russian authorities and a desire for long-term cooperation with the company.

Centralized, traceable blockchain used for specific transactions with verification of the client's identity does not carry risks for public interests. However, authorities deny the very possibility of interacting with corporations on the basis of mutually beneficial agreements, which may lead to the political isolation of the country. At the same time, Russian Facebook members will still find a way (as it was with Telegram) to use the new opportunities offered by the company.

Calibra, a subsidiary of Facebook that will offer a digital wallet for Libra's cryptocurrency, is currently registered with the Financial Crimes Enforcement Network (FinCEN) in the U.S. Treasury Department as a money service business (MSB) company. This is a legal requirement for businesses carrying out financial transactions. In the future, Calibra will need to obtain government licenses for its operations in each of the states in which it plans to operate, as well as in each jurisdiction.

The Banking Committee of the United States Senate will hear testimony on the 16th of July 2019 on Facebook's Libra cryptocurrency project, where Facebook representatives will answer questions on user privacy, data protection, etc. French Finance Minister Bruno Le Mayor said during the broadcast of Radio Europe 1 that "if Facebook wants to create a tool for transactions, why not"? However, he stressed that Libra should not become a sovereign currency, as this should remain in the hands of the state, not private companies.

Calibra says that it will also follow the recommendations of the European Union and The Financial Action Task Force (FATF) as well as the laws of each jurisdiction in which it will provide services.

Translation by: Boryana Kiskinova