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By Dave Michaels
WASHINGTON -- Facebook Inc. said its Libra cryptocurrency would be regulated by Switzerland's financial watchdog, adding the digital money would never compete with national currencies or undermine the role of central banks.
The details about Facebook's Libra plans were included in written testimony that company executive David Marcus plans to deliver Tuesday to the Senate Banking Committee. Mr. Marcus has the challenge of tamping down concerns that Facebook -- already embroiled in policy fights over digital advertising and customer data -- is primed to disrupt the financial sector, one of the world's most highly regulated areas of business.
President Trump, Federal Reserve Chairman Jerome Powell and others have already expressed broad concern about Facebook's foray into a space dogged by concerns about money laundering and manipulative trading. Some Democratic members of Congress have called on Facebook to suspend work on Libra until Washington is satisfied with the oversight regime.
"We know we need to take the time to get this right," Mr. Marcus said in written testimony. "Facebook will not offer the Libra digital currency until we have fully addressed regulatory concerns and received appropriate approvals."
Libra's primary regulator would be the Swiss Financial Markets Supervisory Authority, Mr. Marcus said, because the group in charge of the project will be based in Geneva. The group includes more than a dozen other companies, including Mastercard Inc. and eBay Inc., indicating that Facebook may not be in full control Libra once it is off the ground.
The primary purpose of the cryptocurrency is to enable people to use and transfer money around the globe, at a cheaper cost than the current options, Facebook said. The Silicon Valley giant added Libra would be most useful in countries where banking options are scant and the home currency is volatile.
Facebook has said Libra would be a "stablecoin" pegged to a basket of developed-world currencies. The coins will be backed by a reserve of financial assets that include bank deposits and government bonds.
The Libra group "will work with the Federal Reserve and other central banks to make sure Libra does not compete with sovereign currencies or interfere with monetary policy," Mr. Marcus said in his testimony.
Libra isn't an investment, Mr. Marcus also said: "People will not buy it to hold like they would a stock or a bond."
If it isn't an investment, the Securities and Exchange Commission would less likely regulate the Libra. The SEC enforces investor-protection laws that require frequent and elaborate public disclosures. The SEC is reviewing whether Libra should fall under its jurisdiction, according to people familiar with the matter.
(END) Dow Jones Newswires
July 15, 2019 13:16 ET (17:16 GMT)
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