Hamers said the potential for Libra users to evade anti-money laundering standards and facilitate “financial… crime” raises questions for banks to “take measures and exit the client, or not accept the client.” Adding, “Those are discussions you would have to have.”
An ING executive warned banks may drop Facebook as a customer if the social media giant continues with its experimental foray into cryptocurrency without addressing regulatory concerns.
In an interview with the Financial Times on Tuesday, CEO Ralph Hamers said the Libra project’s unresolved regulatory issues place a degree of risk on banks, as “gatekeepers to the financial system.”
In recent weeks, several prominent payments operators – including Visa, Stripe and Mastercard – have exited the non-binding letter of intent to join the Libra Association. However, Hamer’s statement today, is the first signal Libra’s regulatory risks speak to the project’s lead Facebook as a bankable client.
A Facebook spokesperson said:
“From the beginning, we’ve said we’re committed to taking the time to get this right. The Libra Association published a white paper to begin a dialogue with the regulators and policymakers who oversee the stability and security of our financial systems. As a member of the Libra Association, we will continue to be a part of this dialogue to ensure that this global financial infrastructure is governed in a way that is reflective of the people it serves. Facebook will not offer Libra through its Calibra wallet until the Association has fully addressed regulators’ concerns and received appropriate approvals.”
“We are such a large, regulated institution that you don’t want to risk anything”, said Hamers. “We’ve said we’ll take a look and see how this develops.”
Libra Won’t Spread as Quickly as Facebook, Says Calibra Exec
Libra will take years – if not decades – to catch on says a Calibra executive.
The new stablecoin project won’t scale like social media, said Kevin Weil, vice president of product at Facebook subsidiary Calibra at the Web Summit in Lisbon, Portugal on Tuesday. CNBC reported on his talk.
“This is not going to be a thing that spreads like a social network. This is going to be the work not of years but of decades, and it’s worth making”, Weil said.
The Calibra VP further claimed the Libra Association and its members remain determined regardless of the recent high profile departures, including MasterCard and Visa. The 21 initial members signed a formal charter last month in Geneva, Switzerland. Weil said that Libra was just an idea 18 months ago, but now has 21 members and a “bunch more that are looking to be involved.”
Weil told Web Summit attendees that users will have more wallets than just Calibra, the Libra-specific wallet Facebook is creating, to choose from. Fears of Facebook using Calibra for discriminatory or otherwise unsavory purposes were recently raised by U.S. lawmakers at a congressional hearing on Libra joined by Facebook CEO Mark Zuckerburg.
Weil reiterated Zuckerberg’s hearing statements, saying other wallet options will be available that can still leverage “the accessibility and lower cost brought by the libra ecosystem.”
Indeed, private wallets are already available. Israeli developer ZenGo released a keyless non-custodial Libra-compatible wallet only two weeks after Facebook announced the stablecoin project in June.