(Arête News) — The European Commission has opened an antitrust investigation into “potential anti-competitive behavior” related to Facebook’s Libra Association created to oversee its cryptocurrency project, Bloomberg reported on Tuesday.
The European Union’s antitrust probe of Facebook’s two-month-old Libra cryptocurrency project focuses on concerns that it would improperly shut out rival payment systems, the news agency said, citing a document it said it had viewed.
Regulators and central bankers have cautioned that there is a need for strict regulation of Libra to avoid disruptions to the international financial system.
At a hearing in mid-July before the U.S. Senate Banking Committee, David Marcus, who heads the Libra project at Facebook, said he expected Swiss authorities to regulate the cryptocurrency because the Libra Association is a new Geneva-based international organization.
“To be clear, the Libra Association expects that it will be licensed, regulated, and subject to supervisory oversight. Because the association is headquartered in Geneva, it will be supervised by the Swiss Financial Markets Supervisory Authority,” Marcus testified.
“We have had preliminary discussions with FINMA and expect to engage with them on an appropriate regulatory framework for the Libra Association,” he said, adding that the U.S. Treasury Department’s Financial Crimes Enforcement Network, or FinCEN, is also expected to play a role. “The association also intends to register with FinCEN as a money services business.”
Marcus said that “for the purposes of data and privacy protections, the Swiss Federal Data Protection and Information Commissioner will be the Libra Association’s privacy regulator.”
That presumption resulted in a July 17 letter from the Swiss commissioner, Adrian Lobsiger, who said he had not yet been contacted about any such role.
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Lobsiger’s office said in a statement he expects the Libra Association to conduct an impact assessment of “the data protection risks for the persons concerned and proposed appropriate measures to minimize these risks.”
He also asked for an update on the project’s status, so he could assess “the extent to which his advisory competences and supervisory powers would apply.” His office has given the Libra project until the end of August to provide the requested information, and a U.S. delegation of lawmakers planned to meet with Swiss authorities this week to discuss their concerns.
Earlier this month, data protection authorities in Albania, Australia, Burkina Faso, Canada, the European Union, the U.K. and the United States released a joint statement demanding more transparency from those overseeing the Libra project.
“As representatives of the global community of data protection and privacy enforcement authorities, collectively responsible for promoting the privacy of many millions of people around the world, we are joining together to express our shared concerns about the privacy risks posed by the Libra digital currency and infrastructure,” the authorities said.
“These risks are not limited to financial privacy,” they said, “since the involvement of Facebook Inc., and its expansive categories of data collection on hundreds of millions of users, raises additional concerns.”