Central bank says Libra must operate like a bank if it’s to launch in UK

The Bank of England’s (BoE) Financial Policy Committee (FPC) has laid down a set of rules that Facebook’s Libra and other cryptocurrencies must follow if they are to be launched in Britain.

While some question if Facebook’s ‘cryptocurrency’ Libra will ever launch, the BoE’s FPC did recognize its potential to becoming an “important payment system,” City AM reports.

These kinds of payment systems would need to demonstrate the system’s security and also undergo regulatory supervision, the FPC added.

In short, the “rules of engagement” as the BoE calls them, are nothing out of the ordinary. But it certainly demonstrates that financial institutions are taking digital currencies like Libra seriously.

The 💜 of EU tech

The latest rumblings from the EU tech scene, a story from our wise ol' founder Boris, and some questionable AI art. It's free, every week, in your inbox. Sign up now!

“The terms of engagement for innovations such as Libra must be adopted in advance of any launch,” the FPC said in a statement, The Times reported. “UK authorities should use their powers accordingly.”

The rules will require digital currency firms to demonstrate the “operational and financial resilience” of payments from sender to recipient.

The rules also require digital currency providers, like Libra, to provide sufficient information to regulators so that payments can be monitored. In other words, they need to satisfy know your customer and anti-money laundering protocols.

According to a report from Reuters, the BoE’s FPC said that it will enact the “principles by applying existing supervisory ‘tools,’ rather than resorting to new rules” entirely.

This likely won’t cause too much stress for Facebook on top of what it’s already facing.

Earlier this week, Hard Fork reported that Facebook will face further grilling from EU regulators to answer questions about the risks posed by the project.

Specifically Facebook will have to clarify how it plans to be financially stable, prevent money laundering, and secure data.

The Bank of England isn’t exactly throwing Libra any curveballs here, but it’s certainly another hurdle to overcome.

Want more Hard Fork? Join us in Amsterdam on October 15-17 to discuss blockchain and cryptocurrency with leading experts.