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EU governments, Uganda’s Kasaija warn about crypto-currencies

FILE PHOTO: Kasaija has warned about crypto-currencies

Kampala, Uganda | THE INDEPENDENT & AFP | A day after Uganda’s Finance Minister Matia Kasaija warned about the use of crypto-currencies, European governments are asking questions about Libra, forcing Facebook’s partners to reconsider.

Mastercard, Visa and other financial partners being enlisted to oversee Facebook-backed cryptocurrency Libra are having second thoughts as regulators unleash ire on the project, according to a report Tuesday.

In Kampala, Finance Minister Kasaija warned Monday that the government does not recognize any crypto-currency as legal tender in Uganda.

He confirmed that Uganda has not licensed any organization in Uganda to sell crypto-currencies or to facilitate the trade in crypto-currencies.

“As such, unlike other owners of financial assets who are protected by Government regulation, holders of crypto-currencies in Uganda do not enjoy any consumer protection should they lose the value assigned to their holdings of crypto-currencies, or should organization facilitating the use, holding or trading of crypto-currencies fail for whatever reason to deliver the services or value they have promised,” he said.

He said, “the public is advised to appraise themselves of the risks associated with cyber-currencies, and exercise caution before they make transactions involving such products.”

In San Francisco, United States, it was revealed Tuesday that Libra partners Mastercard, Visa and other financial partners being enlisted to oversee the Facebook-backed cryptocurrency are having second thoughts as regulators unleash ire on the project.

A Libra Association created by Facebook to independently manage the digital money still had its initial group of backers on Tuesday.

But a Wall Street Journal report said some of those on it were reconsidering their roles due to opposition expressed by governments digging for information about the project.

Visa referred AFP to comments made by chief executive Alfred Kelly in an interview in August with CNBC in which he said the company had signed a non-binding letter of intent with the association but was “not a member of anything.”

Kelly went on to say Visa would not join the association if it isn’t satisfied when it comes to complying with regulations.

The association, which is working on a charter that will outline involvement by founding members, declined to comment and Mastercard did not immediately respond to a query.

The head of the Libra Association said last week that the project’s leaders aimed to “reassure” regulators worried about the virtual money.

Bertrand Perez, director general of the Geneva-based non-profit association, said Libra will be backed by a basket of currency assets and short-term government bonds to avoid the wild swings seen with bitcoin and other cryptocurrencies.

Zuckerberg has met US senators

– Hashing out details –

Facebook’s plans for Libra have meet with concern by governments and critics of the social network behemoth, whose reputation has been tarnished by its role in spreading fake information and extremist videos.

Last month, France’s economy and finance minister Bruno Le Maire warned that under current circumstances Libra posed a threat to the “monetary sovereignty” of governments and could not be authorized in Europe.

Officials have also raised concerns about how the currency would be regulated, particularly how it would comply with regulations about combatting money laundering and financing of terrorism.

“We are carrying out a normal course of work with regulators to show them that, in terms of anti-money laundering, the (Libra) system will be at least equivalent to the conventional monetary system,” Perez said.

Besides Facebook, backers of Libra include payment giants Visa, MasterCard and PayPal, as well as ride-hailing apps Lyft and Uber.

The Libra Association is set to expand, as over 100 companies and organizations have expressed an interest in joining, Perez said.

Facebook has promoted Libra as an opportunity to provide online commerce and financial services at minimal cost to more than a billion “unbanked” people — adults without bank accounts or those who use services outside the banking system such as payday loans to make ends meet.

In leaked comments from a meeting of Facebook employees in July, Facebook chief executive Mark Zuckerberg said he remained optimistic for Libra despite harsh comments from public officials in several countries.

“The public things, I think, tend to be a little more dramatic,” he said.

“But a bigger part of it is private engagement with regulators around the world, and those, I think, often, are more substantive and less dramatic… That’s where a lot of the discussions and details get hashed out on things.”

 

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