Despite the government’s resistance toward the social media giant’s digital currency project, Facebook is pressing forward with its Libra Association plans and the world’s governments and economic caretakers are battling back. Announced in June 2019, Libra is scheduled to launch in 2020. Despite hearings with the U.S. Congress, the project’s development is on track and global economic leaders, like United States and European Union members, have been quick to criticize Libra.
Is this really for fear of economic stability or a desire to be the only game in town? For some, Libra is the interloper and the battle ensues for legitimacy and cryptocurrency dominance.
The biggest hurdle has been privacy concerns for Facebook’s 1.74 billion users across the globe. Mark Zuckerberg recently testified before U.S. lawmakers regarding Libra where he admitted that while people wished Facebook wasn’t behind this, Facebook saw an opportunity and they’ve seized upon it. Shortly after Zuckerberg’s testimony, China announced plans to develop and launch their own stablecoin. This surprised many considering how China had severely pushed back against cryptocurrencies.
Now Canada is looking into cryptocurrency. Canada has been open to cryptocurrency plans, but Canada acknowledges that with Facebook’s intention to “dominate money”, the Canadian government must consider a new way of thinking.
Facebook’s “persuasive scheme to launch what was essentially a credible new global currency, kicked off a flurry of fresh activity that could transform the way we think of money”.
Canada may be the first government to acknowledge that Libra is essentially Facebook’s way of launching a new global currency. U.S. lawmakers have cited concerns of privacy, security and money laundering, but at the heart of it, the Libra project does hint at a global currency. This pushes governments to consider what role individual companies have when it comes to cryptocurrency and they are pushing back.
Naturally, there is a litany of concerns surrounding the project, but does grilling Zuckerberg for six-hours before the regulators and lawmakers help or hinder the project – or does it have any effect at all?
Gov. Lael Brainard has argued that Libra could pose risks to consumers due to a lack of clarity over their rights with respect to the token’s underlying assets and to the system overall. Brainard has also pointed to data security and privacy risks, citing a “potential ambiguity surrounding the ability of authorities to provide oversight and backstop liquidity and to collaborate across borders.”
Here’s the thing: Are they questioning the integrity of Facebook or really looking at the independent Libra project?
We might argue that they are asking the wrong guy for answers. Zuckerberg certainly has to face the consequences of Facebook’s security and privacy issues, but he really has no seat at the Libra table. The fact that Facebook launched the idea might be their biggest anchor weight.
Still, Libra would need to satisfy higher-than-average standards, regulatory and supervisory expectations given it has 2.7 billion users. Zuckerberg has iterated the fact that even without the government’s nod, Calibra Association will go ahead with Libra’s launch. Unfortunately for U.S. consumers, if the government decides to block the use of Libra to its citizens, there isn’t much we can do about it until the legislative opinions change.
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