251. Facebook's Libra cryptocurrency - regulation | Gowling WLG
With regard to Libra specifically, Mark Carney, the governor of the BoE, appeared to give Libra a cautious backing, stating that it could 'substantially improve financial inclusion and dramatically lower the cost of domestic and cross border payments.' However, he continued to say that there would be significant regulatory scrutiny of the project. Some commentators referred to Libra as a 'stablecoin' when it was announced but Christopher Woolard, executive director of strategy and competition at the FCA, made clear that the FCA does not recognise this as a distinct category of cryptoasset.
The first thing the regulators would want to know is whether, and to what extent, Libra falls within the UK's current regulatory perimeter by asking Facebook a series of questions to understand, for example, who would use it? Why would they use it? What type of cryptoasset is it?
They would then determine whether Libra falls within one of the three FCA recognised types of cryptoasset (and therefore where it lies in relation to the perimeter) which they detailed in their July 2019 Final Guidance on Cryptoassets (the Guidance).
The Guidance outlines cryptoassets or 'tokens' which are regulated and those which are unregulated:
The FCA considers a security to refer broadly to an instrument that indicates an ownership position in an entity, a creditor relationship with an entity, or other rights to ownership or profit. Firms carrying on a specified activity, by way of business in the UK, involving a cryptoasset which is a specified investment (e.g. security tokens) may require authorisation and the relevant permission.
