HSBA Hsbc Holdings Plc

By Jeff Horwitz 

Facebook Inc.'s cryptocurrency project, Libra, is bringing on HSBC Holdings PLC's top attorney to lead the effort as it revamps following an icy reception last year.

Stuart Levey, a former U.S. Treasury undersecretary who has spent the last eight years as HSBC's chief legal officer, said he would leave the bank this summer to become the Switzerland-based Libra Association's chief executive.

The hire of a prominent banking industry attorney with a background in compliance reflects the association's efforts to overhaul its plans for the digital currency in ways that will make them more palatable to governments around the world.

Libra Association is a Geneva-based nonprofit organization established by Facebook and composed of independent members.

The association announced revisions to the project last month, de-emphasizing its initial plans for a unique, asset-backed token that regulators feared might displace their own currencies online. And despite initial interest in eventually building a decentralized system, the Libra Association is pledging to retain control over the participants and transactions on its network.

"You need one entity setting the standards, setting the ground rules, making sure that people are living up to a certain level of conduct," Mr. Levey said in an interview.

The Libra project made a rocky public debut last June. As first conceived by Facebook and partners in the payments industry, venture capital and nonprofit world, it would allow holders of digital wallets to send and receive blockchain-based tokens backed by a basket of currencies. Facebook itself will create its own wallet, known as Calibra, which could be used for peer-to-peer payments and shopping on its platforms, though the platform would be open to other wallets as well.

After the first version of the proposal met a cool reception from regulators around the world, major payments industry partners including Visa Inc., Mastercard Inc. and PayPal Holdings Inc. dropped out of the project.

Switzerland's outgoing president declared last year that plans to back Libra with numerous currencies was unacceptable, and that the project, "in this form, has thus failed."

Libra's launch was pushed back and its structure redesigned to be more like a traditional payments platform.

The association is now seeking approval to launch from Swiss regulators, who are evaluating Libra in consultation with regulators from 20 different countries.

Mr. Levey, who played a central role in designing the George W. Bush administration's sanctions on Iran as the Treasury Department's first Undersecretary for Terrorism and Financial Intelligence, said that he would closely scrutinize the currency project to ensure that it lived up to regulatory expectations regarding money laundering, privacy and the handling of financial reserves backing its token.

"As the Libra proposal was rolled out, there were expressions of concern about how you could build a system like this and make sure it was done with robust financial controls," Mr. Levey said. He said he believes that the prospect of a unified and auditable system would make Libra safer, simpler and cheaper than existing money transfer and payments networks.

Mr. Levey's credentials may help win Libra breathing room as such questions are sorted out. Former Treasury Secretary Henry Paulson praised him on Tuesday for his commitment to fighting money laundering and terrorist finance.

Mr. Paulson declined to comment on the overall project's trajectory, saying in a brief conversation Tuesday that "I haven't done my work on Libra." But he called Mr. Levey "an extraordinary talent," adding "I'm confident any digital currency that he has responsibility for will set a very high standard."

Write to Jeff Horwitz at Jeff.Horwitz@wsj.com

(END) Dow Jones Newswires

May 06, 2020 12:44 ET (16:44 GMT)

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