The Libra Association on May 6 announced that it has selected Stuart Levey, HSBCs chief legal officer and a former first undersecretary of the Treasury for terrorism and financial intelligence as its first CEO.
Levey’s appointment is a loud statement by the Libra Association that it is serious about moving forward with its Libra stablecoin project despite strong opposition from U.S. Treasury Secretary Steven Mnuchin, as well as central bankers and finance ministers around the world.
Created by Facebook, the Libra project would create a stablecoin usable by any of Facebook’s 2.7 billion users worldwide. It was widely denounced as having the potential to destabilize currencies and make it harder for central banks to combat economic downturns.
By hiring Levey, who was also principal associate deputy attorney general at the U.S. Justice Department, the Facebook-founded Libra Association is announcing that compliance—with central bankers, financial regulators, tax authorities, and criminal and intelligence investigators—will be a prime driver as it moves forward.
Promising “robust controls to detect and deter illicit financial activity,” Levey said, “I look forward to working closely with governments, regulators, and all of our stakeholders to realize this vision.”
Lawyers, guns, and money
Levey, who oversaw the Financial Crimes Enforcement Network (FinCEN) under both Presidents George W. Bush and Barack Obama, “was instrumental in setting U.S. and international policy to combat illicit finance,” the association noted.
In that role, he also over saw the implementation and enforcement of U.S. sanctions, as well as anti-money laundering (AML) and countering the financing of terrorism (CFT).
Pointing to the “bipartisan respect and influence” Levey enjoyed at the Treasury Department, Libra Association board member Katie Haun, a general partner at venture capital firm Andreessen Horowitz, said she was “very excited” to have Levey at Libra’s helm.
“Stuart brings to the Libra Association the rare combination of an accomplished leader in both the government, where he enjoyed bipartisan respect and influence, and the private sector where he managed teams spread across the globe,” Haun said. “This unique experience allows him to bring a wealth of knowledge in banking, finance, regulatory policy and national security to the Association and strike the right balance between innovation and regulation.”
I get knocked down
Founded by Facebook, the global cryptocurrency project is run by the Libra Association, an independent governing council in which each member has an equal vote—a structure designed to stop people from calling it “Facebook’s libra stablecoin.”
On April 16, the Libra Association applied for a payment system license from the Swiss Financial Markets Supervisory Authority, known as FINMA, where it is based.
At the time, Facebook’s point man for the cryptocurrency project, Calibra digital wallet head David Marcus, noted that “less than 10%” of the association’s funding now comes from Facebook, which largely footed the initial bill. Of course, with 22 members, that’s still nearly double its fair share.
The Libra Association suffered a number of blows from the very first day it was announced, with elected officials from French Finance Minister Bruno Le Maire to House Financial Services Committee Chair Maxine Waters (D-Calif.) denouncing the project on June 18. In mid-October, it lost seven key members, including Mastercard, Visa, PayPal, and eBay to political pressure.
On Oct. 23, Facebook CEO Mark Zuckerberg was forced to promise that Facebook would not participate in Libra without U.S. regulatory approval, while testifying before the House Financial Services Committee.
The case wasn’t helped on Feb. 2, when Mastercard CEO Ajay Banga, said concerns about the association’s commitment to regulatory compliance was the real reason it quit. As oppose to the threat by several senators to bring extra regulatory scrutiny to all of Mastercard’s operations.
Time may change me
Levey’s hiring is another step in the Libra Association’s recent reinvention of its stablecoin project.
In April, the group changed the Libra whitepaper in a number of ways, most notably replacing the basket of global fiat currencies that were to back the libra coins.
The Libra Association said it now plans to offer digital versions of several currencies, beginning with the Libra dollar (LibraUSD), Libra euro (LibraEUR), and Libra pound (LibraGBP). Those will now back the originally conceived global Libra payment token (≋LBR).
While many governments, central bankers, and regulators have said they fear Libra’s power over the developed world’s finances, the association has pitched itself as an engine of inclusiveness, aimed at bringing more than one billion poor and unbanked people in the developing world into the mainstream financial system.
More broadly, Levey said under his leadership, the association to would chart “a bold path forward to harness the power of technology to transform the global payments landscape.”
He also touched on the Libra Association claim to be focused on bringing the poor into the formal banking and finance system. “Technology provides us with the opportunity to make it easier for individuals and businesses to send and receive money, and to empower more than a billion people who have been left on the sidelines of the financial system,” said Levey in a May 6 press release.
Haun touched on the same theme, saying Levey “shares our vision for using blockchain technology to deliver a more open, inclusive and high-functioning payment system that puts crypto in the hands of billions around the world.”