The Geneva-based association tasked with overseeing Facebook’s Libra digital currency is to pursue a license as a payment system in Switzerland.

The Libra Association, an independent non-profit, brings together Facebook’s Calibra digital currency project with 27 global payments, technologies, telecommunications and venture capital firms - including Mastercard, Visa, PayPal, Uber and eBay - to supervise the launch and development of the social media giant’s Libra coin - currently scheduled for 2020.

The association said it intends pursue a license as a payment system, with lead supervisory authority under the Swiss Financial Market Supervisory Authority (FINMA) to a secure a ruling which clarifies the regulatory status of the Libra coin, as well as the payments and financial services ecosystem that springs up around it.

Facebook announced plans earlier last year to launch the blockchain-based digital token for payments and transfers on its Facebook, WhatsApp and Instagram platforms, that would be underpinned by a basket of fiat currencies including the US Dollar and supervised by the association as a so-called ‘stablecoin’.

The announcement provoked a fierce backlash from policy makers and regulatory authorities, including US president Donald Trump, who has said that Facebook would have to apply for a banking licence amid fears that the digital currency could disrupt the global banking system.

Facebook has said it is prepared to postpone the launch of its Libra digital currency until global financial regulators are satisfied that it meets security, data privacy and consumer protection standards.

The Libra Association said the digital currency is being envisioned as an open-source financial services network, while the Libra blockchain has the potential to level the playing field for people on the margins of basic payment networks and financial services who would otherwise struggle to send and receive money due to limited banking access.

FINMA has confirmed receipt of enquiry from the Libra Association.

Dante Disparte, the Libra Association’s head of policy and communications, said: “Since our vision for the Libra project was announced three months ago, we have maintained our commitment that technology-powered financial services innovation and strong regulatory compliance and oversight are not in competition.

“We are engaging in constructive dialogue with FINMA and we see a feasible pathway for an open-source blockchain network to become a regulated, low-friction, high-security payment system.”

FINMA said all payment systems based in Switzerland are automatically subject to the “highest international anti-money laundering standards”.

A statement explained: “Due to the issuance of Libra payment tokens, the services planned by the Libra project would clearly go beyond those of a pure payment system and therefore be subject to such additional requirements.

“For bank-like risks, for example, bank-like regulatory requirements would apply,” it continued, adding: “A Swiss payment system licence would thereby permit a combination of the strengths of banking and infrastructure regulation.”

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