It's Not Up to Facebook to Decide What Libra Is, Ex-CFTC Advisor Says

So said Jeff Bandman, a former fintech advisor at the U.S. Commodity Futures Trading Commission, speaking to CoinDesk about Facebook's Libra cryptocurrency in a live broadcast on Tuesday.

Stressing, "One of the most important question about Libra is what it is," Bandman suggested there could be a long way to go before a decision is made by regulators over Facebook's Libra, and how it's classified will not be Facebook's call in the end.

"It's not as if Facebook can just select the category itself identifies with and regulators will just agree to it. They will look behind the scenes, not just the form [of Libra], but the substance and function, and they will decide what it is."

While an advisor at the CFTC, Bandman founded LabCFTC, the agency's in-house unit dedicated to emerging technologies including cryptocurrency.

His comments come just a day after former CFTC chairman Gary Gensler argued in prepared remarks to the U.S. House of Representatives that in his view, Facebook's Libra appears to be an investment vehicle, is thus a security, and should be regulated as such.

"If Libra is a payment system, the payment system regulators are typically the central banks," Bandman said.

"And then you have to look at all the countries Libra is potentially being used or deployed. They may all have slightly different definitions. Maybe in the U.S., Libra is considered as a security, but maybe not in Switzerland."

The types of regulators that are most concerned with the Libra project are those whose mandate is to look after financial stability, Bandman indicated.

Facebook unveiled a policy in January 2018 to ban ads related to initial coin offerings and cryptocurrencies.

Bandman joined other speakers talking with CoinDesk in a live broadcast to unpack Facebook's hearing at the Senate Banking Committee on Tuesday where the firm addressed lawmakers' concerns over its ambitious Libra project.