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Regulators, not lawmakers, should decide whether Facebook needs a banking license to launch the new Libra digital currency, according to Philip Hammond, Britain's outgoing Finance Minister.
Hammond also told CNBC on Monday that the British government would "engage" with Libra and not seek to arrest him.
This week in the United States, the Senate and House Committees are expected to review Facebook's proposed Libra currency and its potential impact on consumers, investors and the US financial system.
The digital social token is being launched as a solution for the number of people in the world who currently operate without access to banking services. He is also seen as a potential source of revenue for Facebook, which would likely compete with the multi-billion dollar remittances market.
President Donald Trump recently said on Twitter that Facebook would need a banking license to make the currency work.
However, speaking to "Squawk Box" on Monday, British Finance Minister Philip Hammond said that asking Facebook to become a bank was a decision that should not be made by lawmakers.
"It's a problem for regulators – we have an independent regulatory system, as you do, and it's basically a problem that regulators need to determine, not politicians," Hammond said. .
The UK government made the decision to engage with the concept of Libra, saying that if properly regulated it could be "a very positive thing," he added. "We will not turn our backs on that or try to stop it.We will get involved and try to work with others to make sure that it is effectively regulated.
However, Hammond warned that without careful scrutiny, Facebook's proposal could introduce "a big risk" into the financial system, as it could quickly be adopted as a tool for money launderers and sponsors of terrorism. He added that he considered Libra to be different from Bitcoin – the most popular cryptocurrency in the world – because both pieces had different property structures.
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