The Chariman of U.S. the Security and Exchange during his latest address to congress shed ambiguous light the regulatory concerns surrounding Facebook’s Libra. As described in a post from Reuters, Jay Clayton, head of the SEC, didn’t provide any detailed statements about whether Facebook’s Libra will be regulated as securities or not. However, he opened the door for further discussion with the company executives.
Can Libra be Regulated as a Security?
During Tuesdays congressional panel of the U.S. Securities and Exchange Commission (SEC), Chairman Jay Clayton was asked to argument on whether or not Facebook Libra’s would be regulated as a security. According to the Reuters report, the Head of the SEC allegedly answered that he was “not prepared to make a decision like that”. Mr. Clayton also added that he hasn’t had the chance to properly discuss the topic with Facebook Company, but also highlighted his openness to the matter. On the other hand, Facebook has declared its full commitment to settle all the regulatory issues before launching the token.
During the panel, Republican commissioner Hester Peirce invited the congress to adopt a forward thinking vision when dealing with digital tokens. According to her, the SEC needs to protect the digital asset environment and build a regulation that shelters these kinds of projects.
Earlier this week, Mr. Clayton also declared that bitcoin needs a better regulatory environment to be listed on major traditional exchanges like Nasdaq or NYSE, as the price discovery does not share the same degree of reliability that other securities offered by major exchange do, which in the case of Libra could be a gigantic step toward absolute mainstream adoption.
From regulators to corporations, from crypto enthusiasts to those who have simply heard the news – Facebook’s decleration to enter the crypto arena has sparked discussion accross the globe, bringing the once-nascent technology to the forefront of private and public discourse.
Many major companies are considering to join the Libra Association. IBM general manager Jason Kelley has declared the firms willingness to collaborate with Facebook and the Geneva-based Libra Association to make the project viable. Meanwhile, American payment giant Paypal has reinforced its commitment to the Association. The tech company, which was of the heavyweight companies announced in the very first chart of the Libra’s Association, has denied its concerns over Libra’s regulatory issues, cautiously believing in its feasibility.
Indeed as the interest raises, Facebook is also under increasing pressure from lawmakers and regulators. French Finance Minister Bruno Le Maire warned the European Union that Libra may be a threat to sovereign currencies. Similar sentiments have spread all over the first world including one of the more pro-cryptocurrency countries in the world, Japan.
Haruhiko Kuroda, the governor of the Bank of Japan, invited other countries to cooperate to fight the systematic risks brought by Libra. As cryptocurrencies are a global phenomenon, for Japan global cooperation is essential to tackle risks that could arise from Libra’s potential global adoption.
International cooperation is imperative to establish similar regulatory guidelines and avoid regulatory arbitrage.