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Facebook’s Libra: A case for capital markets supervision?
Journal of Payments Strategy & Systems,
13
(3),
255-267
(2019)
Abstract
This paper considers some of the seemingly simple questions that people have been asking about Facebook’s Libra, with particular regard to its legal nature. As this paper will show, thanks to the way Libra is structured, it falls under various aspects of European capital markets law. The paper argues that the Libra Association and its resellers will most likely be required to operate properly licensed branch(es) or registered office(s) in the EU. Otherwise, they would not be allowed to market and operate their network on the EU single market. Libra is a complex product combining the functions of traditionally separate product types (namely payment instruments and funds/financial instruments). In this way, it embodies the very risks that capital market regulation seeks to control and mitigate — shrouding these risks in an innovative and exciting technical guise does not change this fact.
Keywords: blockchain; crypto-assets; Libra; Facebook; virtual currencies; capital markets law
The full article is available to subscribers to the journal.
Author's Biography
Ralph Rirsch is a supervisor at the Austrian FMA in the Department for Integrated Conduct Supervision of Banks. He is specialised in the PRIIPs Regulation (on key information documents for packaged retail and insurance-based investment products) and new technologies. Before his time at the FMA, he worked as a consultant in the Austrian banking sector with a focus on regulatory issues (eg markets in financial instruments directive (MiFID II), payment services directive (PSD2)), large-scale IT implementations and database management. Additionally, he was active as a freelance systemic consultant for small and medium enterprises specialised in group dynamics. His academic background is in law (University of Vienna) and international business administration (Vienna University of Economics and Business).
Stefan Tomanek is a legal expert in the Department for Prudential Supervision Asset Management, Prospectus, Consumer Information, at the Austrian Financial Market Authority (FMA). While the supervision of undertakings for collective investments in transferable securities (UCITS) and alternative investment funds (AIFs) is the main focus of his work, he is also heavily involved in the area of crypto assets and related business models. In this context, he is also a delegate in international committees as well as The European Securities and Markets Authority (ESMA) committees. Prior to his work at the FMA, he gained valuable experience in the Legal & Compliance Department of a large Austrian bank. He holds a master’s degree in law from the University of Vienna.
