Despite the recent turmoil surrounding Facebook’s cryptocurrency project, Libra Payment System, the Bank of England has given it quite the endorsement. The institution is reportedly setting out rules of engagement that Libra and other cryptocurrency payment providers would have to meet prior to opening up shop in Britain.
Bank of England Endorses Libra Payment System
It’s safe to say that Facebook’s cryptocurrency initiative dubbed Libra saw mixed reactions from regulators around the world. France and Germany came together, stating that they’d attempt to block the project as it allegedly undermines traditional financial institutions.
Inevitably, that led to turmoil as shortly afterward PayPal announced that it was withdrawing from the Libra Association, with other key backers also in question.
Nevertheless, the Bank of England appears to be unfazed by all of the above. Reportedly, the institution is setting out rules that Libra or any other cryptocurrency payment provider must meet prior to opening its doors in Britain.
“The terms of engagement for innovations such as Libra must be adopted in advance of any launch,” the BoE’s Financial Policy Committee said in a statement. “UK authorities should use their powers accordingly.”
The FPC also stated that “Libra has the potential to become a systematically important payment system.”
The news comes a day after the nominee for the next Finance Commissioner of the European Union, Valdis Dombrovskis, said that he intends to provide a unified approach to cryptocurrencies, including Facebook’s Libra.
Unlike the EU, however, the FPC said that it would apply its existing supervisory tools rather than implement a new set of rules.
Preparing For a Hard Brexit?
It’s perhaps not surprising that the Bank of England sees potential in Facebook’s Libra and cryptocurrencies in general. As reported, Philip Hammond, the UK’s Chancellor and Under-Treasurer of Her Majesty’s Exchequer, said that the country won’t try to stop Libra but rather regulate it in light of its “transformative” potential.
However, it should also be noted that the UK is on the verge of a major political and economic move as discussions on Brexit continue to spiral. With the possibility of a “hard” Brexit seeming more and more realistic, the country could put measures in place to offer alternatives to existing payment solutions across borders.
A “hard” Brexit refers to the UK leaving the European Single Market and the European Union with little to no deal in place, meaning that trade would be governed under the World Trade Organization’s rules, and services wouldn’t be provided by agencies of the EU.
In any case, it will be interesting to see how the situation develops and whether or not cryptocurrency payment providers will be able to adhere to the country’s existing regulatory provisions.