The tech companies supporting Libra, Facebook’s digital currency project, have applied for a payment system license in Switzerland.

The Libra Association has formally started the process of applying for a payments license from the Swiss Financial Markets Supervisory Authority (FINMA), in a move hailed as an “important milestone” for the project.

The Libra project, which includes plans for a blockchain-backed stablecoin currency and Calbira digital wallet, has experienced several setbacks in the last 12 months, after Facebook’s plans drew criticism from governments and regulators around the world over the potential for money laundering and the wider economic impact of a digital currency owned by a tech giant.

Scores of major technology and payments firms - including Visa, Mastercard, PayPal, Stripe and eBay - withdrew from the project after world leaders, including US president Donald Trump and central bankers, expressed their concerns.

In January, the World Economic Forum announced the Global Consortium for Digital Currency Governance, an initiative to combine central banks’ efforts to explore the potential for their own, fiat-backed digital currencies, with financial institutions, government representatives, technical experts, academics and international organisations.

As an apparent response to the backlash, the Libra Association, an independent body based in Geneva to oversee Facebook’s plans, has made significant changes to its original plans for the digital currency following the publication of a charter stating its initial aims and governance policies in June 2019.

In a statement announcing its application to FINMA, the Libra Association said it had made the adjustments as the project moves from concept to a “more operational phase”, adding that the licensing process will continue to have input from central banks and other financial regulatory, supervisory and enforcement authorities around the world.

Libra underlined that it had consulted and engaged with global stakeholders since the publication of its whitepaper and as a result had incorporated key items of feedback into the design of the payment system.

The most significant change is the decision to open it up to single-currency stablecoins, in addition to the multi-currency Libra coin, hinting that the project may be considering the option of co-operating with central banks to facilitate their digital currencies along Libra’s existing payment rails.

The Libra Association also said that it had designed an open and competitive permissioned blockchain which foregoes the planned transition to a permissionless system, but maintains many of the economic and governance properties of the original design.

A revised whitepaper outlining the changes also noted enhancements to the Libra payment system, with a robust framework for financial compliance and network-wide risk management, as well as standards for anti-money laundering, combating the financing of terrorism, and the prevention of illicit activities.

In addition to applying for the FINMA license and updating the whitepaper, the near-term operating expenses of Libra Association have now been funded by its members, the statement said.

FINMA confirmed it had received an application from the Libra Association, stating: “The application filed differs considerably from the project originally submitted, e.g. with a view to the Libra payment system also supporting single-currency stable coins as well as the multi-currency Libra payment token - FINMA will now thoroughly analyse the application.”

FINMA has been in close contact with the Swiss National Bank and more than 20 other supervisory authorities and central banks from around the world since the start of its dealings with the Libra project, the statement added. It is also actively contributing to various international working groups and committees on the development of international policies on stable coins, for example, through the Financial Stability Board (FSB).

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