Despite the recent turmoil concerning Facebook’s cryptocurrency project, Libra, the Bank of England made 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 their business in Britain.
Bank Of England Endorsing Libra
It’s safe to say that Facebook’s cryptocurrency initiative dubbed Libra saw mixed reactions from regulators across the world. France and Germany have come together, stating that they’d attempt to block the project as it undermines the principles of traditional financial institutions.
Inevitably, that led to serious turmoils as shortly after that PayPal announced that it’s 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 have to be adopted in advance before 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 FPC said. “UK authorities should use their powers accordingly.”
In addition, however, the bank’s Financial Policy Committee 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 instead of implementing a new set of rules.
Preparing For a Hard Brexit?
It’s perhaps not surprising that the Bank of England has seen the potential in Facebook’s Libra and in cryptocurrencies, in general. As Cryptopotato 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 to regulate it because of its transformative potential. It appears that this is the line of conduct that the UK is following, indeed.
However, it should also be noted that the UK is on the verge of a major political and economic move as the discussions about Brexit continue to spiral on. With the possibility of a “hard” Brexit seeming more and more realistic, the country could be putting measures in place to have 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 deals in place, meaning that trade will be governed under the World Trade Organization’s rules and the services won’t be provided by the agencies of the EU.
In any case, it remains interesting to see how the situation will develop and whether or not cryptocurrency payment providers will be able to adhere to the existing regulatory provisions in the country.
Featured image courtesy of Flickr.