Swiss Federal Council Receives Update on Stablecoins, Told Libra to be Classified as a Payment System

The Swiss Federal Council received an update yesterday regarding the topic of stablecoins and Facebook’s Libra specifically.

According to a post on the Swiss government website, Switzerland will continue to actively monitor discussions on new digital technologies such as blockchain/DLT and the country is generally open to innovative approaches in the financial market.

Regarding Libra and the Geneva, Switzerland based Libra Association, the supervisory authority FINMA announced on 11 September 2019 that, based on the information available, the project would be classified as a payment system and a corresponding license would be required. Thus Libra would automatically be subject to the Anti-Money Laundering Act and international standards in this area. This appears to be based on a belief that Libra will be based solely on fiat currencies, yet questions have arisen as to whether Libra will also include government bonds or other interest generating assets.

The Federal Council said it is keeping a “very close eye on global stablecoin projects and their associated opportunities and risks.”

There are reservations in the areas of financial stability, the fight against money laundering and terrorist financing, monetary and currency policy, and data protection. The Federal Council is committed to ensuring that the currency and stability policy challenges, in particular, are addressed through international cooperation between governments, central banks and supervisory authorities, with private providers also included.

Additionally, Switzerland is open to discussions on internationally viable standards in connection with the use of new technologies.

The upcoming annual meetings of the Bretton Woods institutions and the meeting of G20 finance ministers and central bank governors provide an ideal platform for these discussions.

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