The UK’s financial markets watchdog has warned Facebook and other issuers of digital currencies against the tech giant’s traditional motto of “move fast and break things”, putting them on notice that providers of financial services must “get it right the first time round.”
Christopher Woolard, a senior regulator at the Financial Conduct Authority, said on Tuesday it would not tolerate cutting corners when bringing innovations to the market, or tech companies trying to test a product “in beta for a few million people and see what happens”.
The comments by Mr Woolard come two weeks after Facebook unveiled plans to launch a digital coin, dubbed Libra, with ambitions to upend the delivery of financial services around the world. The FCA has already had discussions with Facebook about the plans, and has also held talks with the Bank of England and the Treasury about the implications of Libra.
“We need to ensure that innovation works in the interests of consumers [ . . .] We need to consider whether consumers understand and actively consent to the trade-offs inherent in those business models.
“And we need to consider the wider impact on market integrity and stability,” said Mr Woolard at a speech in London on Tuesday. “We need to bring new technology, jargon and marketing back to first principles before we can answer tricky policy questions on topics such as consumer protection, market integrity or competition.”
While Mr Woolard said his comments were not targeted at Facebook alone, he referenced Facebook’s well-known mantra of “move fast and break things”.
Facebook said last month that Libra would be backed by hard assets, a basket of currencies and securities to ensure trust and a stable value. Users would be able to make instant and nearly free international money transfers from their mobile phones.
The tech giant’s plans drew a swift response from regulators, politicians and policymakers around the world, who are concerned on a range of issues from tax evasion and money-laundering risks through to monetary policy.
The G7 nations, central banks and International Monetary Fund are planning to work together on a high-level forum that will examine the risks of such currencies and try to work out how to ensure they have sufficient controls against money laundering. Mark Carney, the BoE governor, said the central bank would greet Libra with “an open mind” but not “an open door” and has said if Facebook was successful in attracting users, “it would instantly become systemic and will have to be subject to the highest standards of regulation”.
Facebook said in its launch documents last month: “The success of this venture depends on its trusted and safe integration with the existing financial system. The world’s governments, specifically regulatory and law-enforcement authorities, are essential partners in this endeavour.”