Facebook’s Libra is a Security, According to Former CFTC Chair
In a statement to the U.S. House of Representatives, former Commodity Futures Trading Commission (CFTC) chairman says Facebook’s Libra coin is a security. Gary Gensler served as Chairman between 2009 and 2014 while previously holding other leadership roles within the U.S. Treasury Department. In a written testimony, Gensler says that Facebook’s cryptocurrency has the characteristics of an investment vehicle rather than a currency.
Gensler argument is lies at the heart of Libra’s structure. The cryptocurrency is intended to act as a stablecoin that’s pegged to sovereign currencies like the US Dollar. The Libra Association’s members, who are charged with overseeing Libra’s ongoing development, pay their $10 million minimum and will receive Libra investment tokens in exchange. Each member’s total token ownership translates into their share of the interest earned on assets in the reserve. According to Gensler, he stated that “As currently proposed, the Libra Reserve, in essence, is a pooled investment vehicle that should at a minimum, be regulated by the Securities and Exchange Commission (SEC), with the Libra Association registering as an investment advisor…. It’s unambiguous that [the Libra Investment Token] is a security as it will receive a net return based upon interest on the Libra Reserve.”
Gensler went on to say that, “Investor protection will be just as important for the proposed Libra token as it is for investors in international bond funds or in commodity ETFs such as gold, silver, or oil ETFs.”