Initially named GlobalCoin, the launch of Facebook’s new cryptocurrency Libra slated for 2020, was set to serve the unbanked and lower the cost of peer-to-peer payment transactions.
The Monetary Authority of Singapore (MAS) revealed at the Annual Report media conference on Thursday (27 June) that they held discussions with the social media giant on its plans for Libra.
MAS Managing Director, Ravi Menon, shared that they have been “following [the news] closely” and are “studying this new development”.
The Payment Services Act that will kick in by the end of this year includes “provisions for the regulation of virtual currencies and electronic money in wallets”, he noted.
On how MAS would regulate Libra, he answered, “The key challenge is to figure out the nature of the beast.”
“We need to figure out where Libra fits in within this and that’s why I said we need to understand more about how it works. What is it more like and which box we can put it into?”
“At this point we are not sure yet, but it’s something which we will seriously study.”
Not all scepticism though, Mr Menon said that Libra has promising “interesting propositions” MAS can consider in the area on cross-border payments.
Mark Zuckerberg mentioned that Libra’s mission is to make sending and receiving money as easy as sharing messages and photos on Facebook.
Mr Menon said, “(Libra) does offer the prospect of very cheap payments and the allure of bringing into the financial system the unbanked people in many parts of the world, especially in Asia.”
Mr Menon observed that it is “expensive, inefficient, sometimes risky” to make payments across borders.
“There are various experiments underway including in Singapore on how we can address the cross-border payment problem.”
Yet he remains cautious, saying that it’s not clear now “whether it offers a distinctly superior proposition to existing electronic payment mechanisms”.
But MAS has to first understand the workings behind Libra, the economics behind it, the safety protections, and the privacy issues involved, among others.
He added that it is not clear if the digital asset offers a significant proposition to existing e-payment solutions.
“In Singapore, we have electronic wallets and very good bank applications that allow payments now in three clicks.”
Anson Zeall, Chairman for Singapore’s Cryptocurrency and Blockchain Industry Association, said that while Libra has “big potential” in Singapore and ASEAN, they face the issue of getting regional regulatory consensus.
“It would not just require MAS’ approval, but in Asean, all the regulators have to come to a consensus to allow it,” said Mr Zeall.
“It could potentially be a security token, meaning that it would have to get approval from many countries for the currency to circulate.”
Featured Image Credit: Kentaro Iwamoto, Nikkei Asia Review