Facebook rep meets Israeli regulators on Libra

Tomer Barel / Photo: PR

Tomer Barel, VP of Facebook unit Calibra, met the inter-ministerial team on regulation of virtual assets this week to discuss the social media giant's plan for a digital currency.

At the beginning of this week, Tomer Barel, VP Risk and Operations at Facebook unit Calibra and one of the founders of Facebook's digital currency project Libra, met the inter-ministerial team on decentralized virtual currencies, "Globes" has learned from sources involved in the matter.

The meeting, held on Sunday at the Bank of Israel, was the discussion between the inter-ministerial team and a representative of Facebook on Libra. Representatives of the Bank of Israel, the Ministry of Finance, the Ministry of Justice, the Israel Securities Authority, the Israel Tax Authority, the Israel Money Laundering and Terror Financing Prohibition Authority, and the National Economic Council are members of the team. The Capital Market, Insurance and Savings Authority, which regulates digital wallets and providers of digital currency services, is also represented.

The Bank of Israel confirmed to "Globes" yesterday that the meeting with Barel had taken place. The bank said that "the inter-ministerial team for coordinating regulation of virtual assets holds meetings with fintech organizations from Israel and the around the world as a matter of routine, and the meeting in question took place within this framework."

All the same, the meeting on Sunday was not with just another fintech organization, but with one of the most senior Israeli managers at Facebook, who is one of the team leading the Libra digital currency project for the international social media giant.

Facebook first announced the Libra project six week ago on June 18, saying that it planned to launch a digital currency next year. While responsibility for the Libra project lies with a consortium managed from Switzerland, in which Facebook is a partner together with 27 corporations and non-government organizations around the world, a substantial part of the development work is being carried out by Calibra, which operates in Facebook's R&D centers in New York and Tel Aviv. Following the announcement, Barel said that work on the project in Israel "is focused on the Calibra digital wallet, risk management, compliance, customer service, technical capabilities, constructing tools, and more."

In the period that has elapsed since the announcement, the Libra project has provoked mixed reactions from regulators and politicians around the world. US President Donald Trump and US Secretary of the Treasury Steven Mnuchin criticized Facebook and argued that the digital currency was liable to be used for illegal activities. The Israeli government and Israeli regulators have so far not issued any response to the project.

Calibra is Facebook's blockchain arm, and responsible for, among other things, the digital wallet that will hold Libra. Barel (46) was appointed to his position in the company, at its Tel Aviv offices, in May 2018. Before that, he was a senior vice president and Chief Risk Officer at PayPal and headed PayPal Israel.

According to the information that has reached "Globes", no representatives of any other companies that deal in blockchain or digital currencies were present at Sunday's meeting between Barel and the inter-ministerial team. Sources familiar with the matter said to "Globes" that Barel told the team members that 80% of the issues relating to the Libra project had been resolved with the regulators in the US.

"Globes" has also learned that in the discussion with the inter-ministerial team, Barel expressed a commitment that Libra would also meet all regulatory requirements in Israel. He told the team that Israel could and should be a central player as far as Libra was concerned. Barel gave an assurance that Facebook itself would have no access to data on users of the currency, and that no improper use would be made of user information.

Barel apparently also commented on criticism of the Libra project by legislators in the US, where, in hearings in the Congress, demands were raised that Facebook should halt development of its digital currency until all regulatory concerns had been addressed. US Federal Reserve chairman Jerome Powell seconded this demand.

Facebook has issued no confirmation or response to "Globes'" report of the meeting between Barel and the inter-ministerial committee. A Facebook spokesperson did however state in reply to an approach from "Globes": "We know that the journey to launching Libra will be a long one and that we cannot do this alone. Engaging with regulators, policymakers, and experts is critical to Libra’s success. This was the whole reason that Facebook along with other members of the Libra Association shared our plans early. The period of time between now and the launch of Libra is intended for holding an open and participatory process. We will take the time necessary to ensure that things are done in the right way."

As "Globes" reported earlier this month, following Facebook's Libra announcement, the Israel Bitcoin Association wrote to Governor of the Bank of Israel Amir Yaron demanding that the use of digital currencies should be regularized. The Association, headed by Meni Rosenfled, is a non-profit organization that seeks to promote free trading technology such as bitcoin and other cryptographic currencies. The Bank of Israel stated in response to the letter: "The inter-ministerial team for coordinating regulation of virtual assets mentioned in the letter continues its activity and monitors all developments in the field."

Meanwhile, Facebook itself has expressed uncertainty over whether Libra will ever be launched. In its latest quarterly reports filed with the US Securities and Exchange Commission the company said: "Libra has drawn significant scrutiny from governments and regulators in multiple jurisdictions and we expect that scrutiny to continue... In addition, market acceptance of such currency is subject to significant uncertainty. As such, there can be no assurance that Libra or our associated products and services will be made available in a timely manner, or at all. We do not have significant prior experience with digital currency or blockchain technology, which may adversely affect our ability to successfully develop and market these products and services."

Published by Globes, Israel business news - en.globes.co.il - on July 30, 2019

© Copyright of Globes Publisher Itonut (1983) Ltd. 2019

Tomer Barel / Photo: PR
Tomer Barel / Photo: PR
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