Facebook is moving quickly with a planned cryptocurrency. The U.S. tech giant's speed has taken Swiss officials by surprise.
«Move fast and break things» – Mark Zuckerberg's now-infamous saying, which refers to disruption: the more the better. That's not supposed to be the case with Facebook's cryptocurrency project, Libra, poised for next year. David Marcus, who is running the subsidiary, told U.S. lawmakers that the project was actively seeking regulation in Switzerland, where Libra will be based.
Marcus, a Genevan native, rankled congressional representatives with plans to set Libra up in Geneva. The plan is to place Libra in the hands of a Swiss foundation or association together with other investors, like Visa or Uber, for example.
Swiss Shield?
Facebook's plan to shift this much control out of U.S. regulatory purview? Nothing doing, U.S. senators said. Marcus argues the project doesn't want to escape U.S. oversight: Facebook is still based in the U.S. Libra opted for Switzerland because the alpine nation is also home to the Bank for International Settlements (the «central bankers' bank»).
Marcus cited Switzerland's data protection watchdog as the overseer for Libra's privacy issues – only to be embarrassed when the Bern-based agency said it hadn't heard from either Facebook or Libra about the project. The watchdog said it awaits more information from Facebook or Libra in order to evaluate whether the agency has oversight.
Bumbled Diplomatic Effort
Facebook is a step further with Finma, Switzerland's banking regulator. A spokesman said the supervisor is in touch with Libra, but didn't comment on the status of talks. Most regulators have taken a skeptical approach: Japan and Singapore have asked Facebook for more information about the project.
Policymakers including Fed boss Jerome Powell, Bank of England head Mark Carney, French finance minister Bruno Le Maire, and European Central Bank official Benoit Cœuré have been critical of Libra. The cryptocurrency «would instantly become systemic» and will have to be subject to the highest standards of regulation, Carney said.
The responses are surprising: given Libra's relevance for financial stability and Facebook's current U.S. woes over privacy, Marcus could have been expected to lay the groundwork for the launch more carefully.
