Facebook will not be the last of the US tech giants to enter the financial services industry and regulators must be prepared for the push, European Central Bank board member Benoit Coeure said this weekend.
Speaking on Sunday, July 8 in Aix-en-Provence in France and reported by Bloomberg, Coeure said Facebook's Libra cryptocurrency project should act as a "wake-up call" to regulators as the social network company is unlikely to be the last of the big US technology firms to enter this market.
According to Bloomberg reporters, Coeure said:
It’s out of the question to allow them to develop in a regulatory void for their financial service activities, because it’s just too dangerous. We have to move more quickly than we’ve been able to do up until now.
Regulators Slow to React
He added that the world's regulators and central banks have been slow to react to the fast-paced development of the digital asset industry and also criticised the banking system for failing to embrace new technologies.
All these projects are a rather useful wake-up call for regulators and public authorities, as they encourage us to raise a number of questions and might make us improve the way we do things.
Coeure's comments add to a growing chorus of concerns from regulators, government officials and central bankers about the entry of Facebook and its partners into the crypto-asset market and, more broadly, into the financial services industry.
Facebook Face US Congress
Indeed, David Marcus, the Facebook executive at the helm of the Libra project testifies before both houses of US Congress later this month.
Maxine Waters, Californian Representative and chair of the House Committee on Financial Services, has also described Facebook's cryptocurrency plans as a wake-up call. In a statement on June 18, she said:
The cryptocurrency market currently lacks a clear regulatory framework to provide strong protections for investors, consumers, and the economy. Regulators should see this as a wake-up call to get serious about the privacy and national security concerns, cybersecurity risks, and trading risks that are posed by cryptocurrencies.
On Friday July 5 Bank of Japan deputy governor Masayoshi Amamiya warned about the entry of large tech firms into the financial services arena and a potential threat to financial stability. He adds to a growing list of central bankers urging caution over the launch of Libra.