Bank of England drafting British Libra regulations before launch |
The Bank of England is drafting tough British Libra regulations in the U.K. Facebook’s Libra is systemically important and will face stringent regulations whenever it is launched in the United Kingdom, says Bank of England. The BOE has put the yet-to-launch cryptocurrency project on notice and mentioned that it would have to undergo tight monetary inspections in the country.
On Tuesday, the bank proclaimed that the upcoming currency would be ‘systemically important’ to the financial network. Thus, it needs to be regulated as per the current rules. The ‘Financial Policy Committee’ (FPC) of the central bank said that British regulators would undertake a detailed analysis of the Libra’s functions, its impact on the financial network and check whether current regulations will apply to Libra or not.
Expect stringent British Libra regulations just like E.U.
As per the FPC that Libra is a systemically important currency. Its resilience will be dependent upon the Libra Reserve along with the Libra Association. Furthermore, financial activities undertaken by associated entities like wallets, validators, and cryptocurrency exchanges will also have an impact on the Libra.
What this means is that simple cryptocurrency wallets won’t cut. Libra wallets must also adhere to the conventional capital requirements and regulations proposed for traditional systems. They must be able to perform such functions as well besides offering the digital wallets features.
Preparations on to draft British Libra regulations
However, the committee did not propose an entirely new set of British Libra regulations to govern such cryptocurrency projects as they did in the European Union. They said current supervisory tools and regulations must be amended appropriately to cover these projects. The same principles governing currency financial assets must apply to projects such as Facebook’s Libra. To put this into effect, the HM Treasury will also make suitable recommendations to the policy updates.
The realization of the fact that Facebook Libra is systemically important will surely pave the way for other countries to take a lenient view. However, that does not make it immune to bad news like PayPal leaving its development and E.U. taking a tough stand on Facebook’s Libra.