Libra Will Face Scrutiny Due to Regulatory Data Concerns
Congress looks into ways to regulate Facebook’s cryptocurrency, Libra.
Global watchdogs and congressional leaders are calling for oversight of a digital asset being launched by Facebook and other tech companies, including PayPal and Uber. A foundation based in Switzerland, called the Libra Association, is related to Facebook’s globalcoin.
In the U.S., senior Democratic politicians are calling for careful oversight or for the project to be put on hold completely while they investigate.
Libra’s Digital Currency is a Hack
Libra aims to be a blockchain-powered global currency that will allow users to send money and make payments around the world. However this is raising concerns from European financial regulators as well.
France in particular is alarmed, as it will, according to Reuters, create a G7 cryptocurrency task force as Facebook’s Libra unsettles governments.
The Libra Association sounds like a Silicon Valley crypto party that could hurt banking and financial services globally with many features unique to blockchain and Facebook’s monopoly on global chat and social apps.
Does Facebook want to Become a Bank?
France and Germany understand the risk Libra poses for the world should it become a sovereign currency augmented by blockchain that could hurt fiat and undercut various more regulated interactions.
Democratic congresswoman and House Financial Services Committee Chairwoman Maxine Waters has called for the company to pause its plans until regulators can take a look. Meanwhile, Democratic Sen. Sherrod Brown calls for strict regulation of Facebook’s cryptocurrency, Libra.
In the years since Facebook has grown into an advertising giant its conduct has not made it many friends, including a massive exodus of its own executives and talent.
Libra is Viewed with Suspicion by Governments and Banks
Given its track record, one of the key questions concerns data privacy and Facebook’s potential influence over the project.
“It is out of question’’ that Libra be allowed to “become a sovereign currency,” Le Maire said at the time. “It can’t and it must not happen.”
France is creating a G7 task force to study how central banks ensure cryptocurrencies like Facebook’s Libra are governed by regulations ranging from money-laundering laws to consumer-protection rules.
It’s incredible to think this is only occurring now in 2019. Thousands of cryptocurrencies already exist and Bitcoin is more than 10 years old.
The announcement of Libra comes at a politically sensitive time for Facebook and yet The Libra Association is full of founding American partners that are only looking to strengthen their global reach by being nodes on Libra’s blockchain. This is a centralized blockchain that could revolutionize payments with a hybrid stablecoin tethered to a basket of fiat currencies.
Swiss Banking System is Mostly Unregulated
Libra choosing Switzerland is also clearly how to irk the financial order, as the largely unregulated nature of the Swiss banking system means Facebook calling Libra a nonprofit association based in Geneva that will run Libra is highly suspicious behavior.
Business analysts believe Libra is a PR ploy that might work. Crypto analysts believe it’s more ambitious than Bitcoin. Meanwhile politicians and bankers are concerned Facebook has already become too powerful for the world. Libra clearly will face some legal and regulatory concerns.
The Battle to be the One True Crypto
It was not so long ago that “crypto” was a bad word on Wall Street, and social media companies such as Facebook banned ads related to it. Now Facebook, it turns out, was cloning a crypto all along.
We cannot allow Facebook to run a risky new cryptocurrency out of a Swiss bank account without oversight — especially given the inconsistent and weak leadership Facebook has displayed thus far in its social impact on the internet, on people and their mental health.
Regulating Libra will be easier said than done, in an era characterized by the over reaching power of technology (FAANG) companies.
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