Facebook’s new cryptocurrency prompts regulation concerns
By Justin Ho
Facebook just announced plans to launch its own cryptocurrency called Libra. The company said it’ll use that currency as the basis for a global payments network, where users could convert their money into Libra and send it around or use it to pay for things. …One regulator will likely be the Federal Reserve, a primary regulator of payments networks in the United States. But Karen Petrou at Federal Financial Analytics said a lot depends on how exactly people buy and sell Libra and how the currency’s asset-backed reserves function. For instance, Facebook said it plans to invest the reserve assets it uses to keep the Libra stable in “low risk assets.” Petrou said if it decides to lend out that money, regulators will wonder whether it’s acting as a bank. Depending on what platforms people use to trade Libra, Facebook may need to work with the Securities and Exchange Commission.