In the latest setback for Facebook’s plans to launch Calibra, Vodafone has left the Libra Association and financial regulators are coming down on the cryptocurrency.
Calibra is the digital wallet for the Libra stablecoin, which is currently under development and expected to launch later in the year.
Vodafone has left the Libra Association to work on its mobile payments platform M-Pesa. Over after a quarter of the association’s original members departed last year, including PayPal, eBay, Visa and Mastercard.
It is speculated that the rest of the companies left due to concerns about increased regulatory scrutiny, which several US senators threatened.
Libra says its mission is to enable a simple global currency and financial infrastructure that empowers billions of people, Both the Australian Prudential Regulation Authority (APRA) and the Reserve Bank of Australia (RBA) have expressed their concerns.
In its submission to Senate Select Committee on Financial Technology and Regulatory Technology, APRA proposed a new regulatory framework working in conjunction with the Council of Financial Regulators which includes Treasury, RBA and the Australian Securities and Investments Commission (ASIC).
As a part of its framework, APRA has revealed that it will potentially oversee digital wallets such as the Calibra.
APRA says: “The new framework is intended not only to be fit for purpose for the current financial system but also be able to accommodate future developments and technological advances, such as proposals for global stable coin eco-systems that have been the subject of significant attention in recent months.”
However, the framework will only have minimal regulatory effects on digital wallet Apple Pay as it holds credit/debit card details and facilitates payments.
The RBA voices its doubts in its submission, saying it is unclear that there will be strong demand for global stablecoins even if they do meet all regulatory requirements, particularly for domestic payments.
The RBA says: “Australia is already well served by a range of low-cost and efficient real-time payment methods, such as the New Payments Platform, that utilise funds held in accounts at prudentially supervised financial institutions.”
The RBA supports the G7’s view that global stablecoins have the potential to be, “more efficient and inclusive than existing payment methods, particularly for cross-border payments.”
Despite these praises, the RBA also agrees with the G7 that these digital wallets “raise significant legal and regulatory risks, including to consumer/investor protection, data privacy, monetary policy, and financial stability.”
The RBA and other regulators are working to ensure that digital wallets like Calibra operate under a comparable regulatory regime to existing payment systems.
In addition, the RBA has been in discussions about whether central banks should issue a new form of electronic money in the form of a central bank digital currency.
The RBA is currently not considering it for retail use but has the potential for a wholesale settlement token based on distributed ledger technology that could allow payment and settlement processes to become more integrated with other business processes.