Facebook’s announcement of its Libra cryptocurrency has started a flurry of reporting on the regulatory formalities of the newly launched subsidiary Calibra, but so far there has been little coverage of what Calibra intends to do to comply with the substance of U.S. and foreign regulations in areas of significant risk, including securities laws, privacy laws, and anti-money laundering/combating the financing of terrorism (AML/CFT).
In the AML/CFT compliance field, Calibra has registered with the Financial Crimes Enforcement Network (FinCEN) as a money services business (MSB), applied for a New York Bitlicense, and recently dropped a little-noticed hint that it intends to upend the field as it currently exists. Its intent appears to be that it will conform its use of blockchain technology to existing laws, but it will conform the specific requirements in the regulations implementing those laws to blockchain technology.
The result would be a new paradigm for AML/CFT compliance.
Calibra head David Marcus has been issuing statements explaining the Libra cryptocurrency and the actions of Facebook and Calibra, and in a Facebook blog postpublished on July 3 he wrote in a declaration about Facebook/Calibra’s plans to engage with regulators and lawmakers:
At the core, we believe that a network that helps move more cash transactions – where a lot of illicit activities happen – to a digital network that features regulated on and off ramps with proper know-your-customer (KYC) practices, combined with the ability for law enforcement and regulators to conduct their own analysis of on-chain activity, will be a big opportunity to increase the efficacy of financial crimes monitoring and enforcement … Libra should improve detection and enforcement, not set these back.
Source: Bloomberg Law