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Social media behemoth Facebook has reportedly kicked off talks with the U.S. Commodity Futures Trading Commission over its cryptocurrency plans, the Financial Times reported.
The report comes on the heels of a letter from the U.S. Senate Banking Committee to Facebook founder and CEO Mark Zuckerberg asking to share the details about the cryptocurrency project.
The cryptocurrency, which will reportedly be called “GlobalCoin,” is said to be a stablecoin pegged to a basket of international currencies. The initiative, purportedly being carried out under “Project Libra,” would make it easy for people to send and receive money even without bank accounts and make purchases on Facebook, Instagram and WhatsApp and across the internet.
Head of CFTC Christopher Giancarlo said that the derivatives regulator was in “very early stages of conversations” with the company to understand if the planned cryptocurrency will fall under its regulatory scope.
“We’re very interested in understanding it better,” he said. “We can only act on an application, we don’t have anything in front of us.”
Giancarlo further added that it is too early to say if GlobalCoin would be limited to cash-based markets, keeping it outside the CFTC’s reach. FT noted that as GlobalCoin could be pegged to the US dollar, it might eliminate the need for derivatives linked to it.
“That’s very clever,” he said, adding that it would still leave some “basis risk,” referring to a situation where the price of an underlying instrument does not move in perfect sync with its derivative.
The regulator is also concerned about how the company will ensure compliance with the anti-money laundering and know-your-customer rules.
A source familiar with the matter told the FT that Facebook has also held talks with the US Treasury to provide project updates. Previous reports suggested that Zuckerberg also met Bank of England Governor Mark Carney to discuss the opportunities and risks associated with cryptocurrencies.
