Facebook shares close lower on Tuesday, existing securities rules may apply to “stablecoin” initiatives such as Libra, IOSCO states

November 6, 2019 7:51 am

The International Organization of Securities Commissions (IOSCO) said earlier this week that existing securities rules might apply to ”stablecoin” digital currency initiatives such as the Libra project by Facebook Inc (FB).

Facebook shares closed lower for the third time in the past ten trading sessions on NASDAQ on Tuesday. The stock edged down 0.21% ($0.40) to $194.32, after touching an intraday low at $193.61, or a price level not seen since November 1st ($189.91).

Shares of Facebook Inc have risen 48.23% so far in 2019 compared with a 22.65% gain for the benchmark index, S&P 500 (SPX).

In 2018, Facebook Inc’s stock went down 25.71%, thus, it underperformed the S&P 500, which registered a 6.24% loss.

The global securities watchdog said that an assessment of stablecoins concluded there could be potential benefits as well as risks associated with such initiatives.

“Our analysis has shown that so-called ‘stablecoins’ can include features that are typical of regulated securities,” Ashley Alder, chair of IOSCO board, said in a statement, suggesting that existing securities rules on disclosures, registration and reporting could be applied.

“It is important that those seeking to launch stablecoins, particularly proposals with potential global scale, engage openly and constructively with all relevant regulatory bodies where they may be seeking to operate,” Alder was quoted as saying by Reuters.

“We therefore encourage international collaboration, so the risks relating to stablecoins can be identified and mitigated, and the potential benefits realized,” Alder added.

Stablecoins are digital currencies pegged to a ”stable” asset or a basket of assets ranging from commodities to national currencies. Facebook’s Libra is to be tied to bank deposits and government securities across regular currencies such as the Euro and the US Dollar.

Facebook Inc had said that it expected to launch Libra in June 2020.

Analyst stock price forecast and recommendation

According to CNN Money, the 44 analysts, offering 12-month forecasts regarding Facebook Inc’s stock price, have a median target of $240.00, with a high estimate of $330.00 and a low estimate of $120.00. The median estimate represents a 23.51% upside compared to the closing price of $194.32 on November 5th.

The same media also reported that at least 39 out of 48 surveyed investment analysts had rated Facebook Inc’s stock as “Buy”, while 5 – as “Hold”. On the other hand, 1 analyst had recommended selling the stock.

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