RBA to keep an eye on Facebook’s global cryptocurrency plans

Maria Nikolova

The Payment System Board discussed the announcement by Facebook of the proposed introduction of a ‘global cryptocurrency’.

The Payments System Board, one of two boards of the Reserve Bank of Australia, has earlier today posted an update regarding its August 2019 Meeting.

The Payments System Board, which responsible for the Reserve Bank’s payments system policy, including policy in relation to clearing and settlement (CS) facilities, discussed a variety of issues at its meeting today, including crypto-assets.

The Board discussed the announcement by Facebook of the proposed introduction of a ‘global cryptocurrency’ as well as a new Facebook subsidiary to provide digital wallet services.

“Bank staff will continue to coordinate with relevant domestic and overseas regulators, to ensure that any payments system implications are appropriately addressed before any launch”.

Let’s note that, in Australia, the Treasury released a paper in January seeking views on the potential benefits and risks of ICOs and the application of the domestic regulatory framework to ICOs.

Relatedly, ASIC has continued its work to mitigate potential harm from crypto-assets to consumers and investors. In particular, ASIC intends to monitor ICOs closely to ensure compliant behaviour, and to introduce market infrastructure regulation for crypto-currency exchanges.

Effective April 3, 2018, digital currency exchange providers have additional AML/CTF obligations. These include:

  • adopting and maintaining an AML/CTF program to identify, mitigate and manage money laundering and terrorism financing risks;
  • identifying and verifying the identities of their customers;
  • reporting to AUSTRAC suspicious matters, and transactions involving physical currency of $10,000 or more;
  • keeping certain records for seven years.

Regarding the stance of other jurisdictions towards Facebook’s Libra, let’s recall that, in June this year, John Glen, Economic Secretary to the UK Treasury, brushed off a question about the launch.

The question was:

“To ask the Chancellor of the Exchequer, what assessment he has made of the potential effect of plans by Facebook to launch its own crypto-currency, Libra, on the stability of the financial system”.

John Glen answered that the Government does not comment on the proposed business models of individual companies.

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