Facebook’s Libra cryptocurrency has hit another snag, as France and Germany have both decided to block its launch in their respective countries over concerns that the social media giant is overstepping its authority.
The cryptocurrency debate has raged on for years now, with critics complaining about everything from its volatility to its propensity for use within the criminal community. Even with the dozens of potentially valuable uses for the innovative currency, the dangers seem to be notably outweighing any value that might be had, particularly when private tech companies — with plenty of unchecked power as it is — are the ones spearheading their own cryptocurrencies.
Now, with entire governments pushing back against the rollout of cryptocurrencies like Facebook’s Libra, we could be reaching a breaking point with notable implications for the future of the currency.
Libra Blocked in France and Germany
For those that don’t know, Libra is Facebook’s foray into cryptocurrency, a blockchain digital currency akin to Bitcoin, and it’s just having some trouble getting off the ground in a meaningful way.
In a joint statement late last week, representatives from the French and German governments state that, in their opinion, Facebook has not done enough to address the many concerns surrounding cryptocurrency, including “financial security, investor protection, prevention of money laundering and terrorism financing, data protection and financial and monetary sovereignty.” They go on to say:
“France and Germany consider that the Libra project, as set out in Facebook’s blueprint, fails to convince that those risks will be properly addressed. No private entity can claim monetary power, which is inherent to the sovereignty of nations,” read the joint statement last week.
The concern isn’t for cryptocurrency as a whole, however, as ministers within both countries expressed support for an alternative public cryptocurrency, which is already in the works. The concern lies within a private company taking on a monetary entity all its own, which can lead to some pretty dicey situations as far as the economy is concerned. However, Facebook has been insistent that Libra will follow current code, and even claim to want strict regulations to keep it in check.
“We believe strong regulatory oversight preventing the Libra Association from deviating from its full 1:1 backing commitment is desirable,” said David Marcus, a co-creator of Libra in a Twitter thread.
Facebook asking for more regulation seems like it could just be lip service, but when it comes to a private company controlling currency, it’s safe to say it’s necessary.
Complaints from Trump
These EU countries aren’t Facebook’s only opposition when it comes to its Libra cryptocurrency. President Trump has also expressed his distrust on the topic on numerous occasions, and those grievances were aired on none other than the president’s favorite social media platform, Twitter.
“Facebook Libra’s ‘virtual currency’ will have little standing or dependability,” said Trump in a flurry of tweets earlier this year. “If Facebook and other companies want to become a bank, they must seek a new Banking Charter and become subject to all Banking Regulations, just like other Banks, both National and International.”
Trump hasn’t gone so far as to ban Libra, or even mention in again since the original post in July. However, if the EU continues to make headlines with their pushback on the cryptocurrency, it’s safe to say the White House will have to take a stance one way or the other.
Facing Further Scrutiny
The serious scrutiny of Libra, however, begins today, as Facebook will be sitting down with officials from 26 central banks, including the US Federal Reserve, to question the social media giant on the “scope and design” of the virtual currency. According to Benoit Coeure, a member of the European Central Bank’s executive board who will chair the meeting, the need for regulation is substantial in cases like this.
“As a new technology, stable coins are largely untested, especially on the scale required to run a global payment system,” said Coeure. “They give rise to a number of serious risks related to public policy priorities. The bar for regulatory approval will be high.”
That regulation will be absolutely necessary when it comes to a social media company launching its own currency. Some may point to Facebook’s rather chequered past with personal data leaks and the claims against it of allowing elections to be manipulated, but now, the economy is at stake. And if bank accounts are going to start being as chaotic and mismanaged as a Facebook comment thread, a little regulation could go a long way.
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