Sat, Jun 22, 2019 - Page 10 News List

Facebook’s crypto-association holds talks with banks

Bloomberg

The biggest US banks have a chance to get in on the new cryptocurrency spearheaded by Facebook Inc.

The association behind the Libra coin is in talks with the banks to participate in its governing body, according to a person familiar with the matter who asked not to be identified discussing private negotiations.

The person did not specify which banks were in talks.

“We’d take a look at it,” Citigroup Inc chief executive officer Michael Corbat said on Thursday at a conference in response to a question about whether his bank would join the association if asked.

Facebook “did not approach us” ahead of the launch, he said.

Facebook this week said that it hopes Libra will provide a low-cost way of sending money to the 1.7 billion people around the world without easy access to traditional financial services.

The firm recruited more than two dozen other companies, including Visa Inc and PayPal Holdings Inc, to be founding members of the association governing the currency.

Dante Disparte, the head of policy and communication for the Libra Association, said the group is in touch with banks in the US and abroad that he declined to identify.

Libra wants big lenders involved as founding members and as banking partners to help hold and manage its currency reserve, he said.

“Banks have an important role to play,” Disparte said in an e-mail. “As such, we very much welcome their participation.”

Libra continued to draw criticism from US lawmakers on Thursday, with Representative Maxine Waters, chair of the US House of Representative’s Financial Services Committee, telling CNBC that the US Congress plans to “move aggressively and very quickly to deal with” the currency.

Waters reiterated her call for Facebook to pause development until lawmakers can look into the project.

“It’s very important for them to stop right now what they’re doing so that we can get a handle on this” she said. “This is like starting a bank without having to go through any steps to do it.”

Corbat said financial-technology firms would be wise to keep the concerns of regulators in mind as they develop new products and services.

While Corbat called himself a “true believer” in cryptocurrency and blockchain, he stopped short of saying his bank would soon offer clients more access to the digital monies.

The challenge with “certain aspects of bitcoin or cryptocurrency is the opaqueness around the sources of the money,” Corbat said.

Anti-money-laundering laws prohibit Citigroup from sending or receiving digital currencies, he said.

At the same conference, Western Union Co chief executive officer Hikmet Ersek said it would be difficult for Facebook and its partners to develop trust among consumers and gain widespread adoption for payments, calling the effort a “long shot.”

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