Latest is that four US lawmakers have sent an official letter instructed Facebook to cease all development of its Libra cryptocurrency. What a bummer!
And this is almost right after the huge fanfare of launching Libra just two weeks ago in bid “..to create a global digital currency that promotes financial inclusion for the unbanked.”
While it is common to hear of clashes between financial regulatory bodies and cryptocurrency proponents since the blockchain-based currencies craze hit all time high at almost USD20k per bitcoin at end 2017, the surprise now is how fast and definitive this Libra ‘ban’ is taking place.
Maybe it is partly due to Facebook’s audacious claim for Libra to act as a new global currency, almost wanting to dethrone Bitcoin’s long-standing position as the gold currency in the cryptocurrency world.
And maybe, because lawmakers fear that Facebook could actually achieve this – which is what the world’s crypto community has been advocating for years, if Libra wins the support of close to 2 billion Facebook users.
Libra’s sell is not new. Like how financial-based cryptos like Ripple XRP and Stella XLM’s sell for transactions to happen at zero fees, Libra also promises interoperability with third party wallet apps (and of course with Facebook’s own Calibra wallet) and common communication apps such as WhatsApp, Messenger and so forth.
Facebook surely went more than the extra mile to ensure that Libra would be bullet-proof from cynicism of having capitalism elements. In the control of Libra, Facebook would only get a single vote in the Libra Association, founded by members including Visa, Uber and Andreessen Horowitz, which have invested at least $10 million each into the project’s operations.
However, this obviously has not allayed the fears of US law makers, as captured from excerpts from the letter they issued to Facebook:-
“..it appears that these products may lend themselves to an entirely new global financial system that is based out of Switzerland and intended to rival U.S. monetary policy and the dollar. This raises serious privacy, trading, national security, and monetary policy concerns for not only Facebook’s over 2 billion users, but also for investors, consumers, and the broader global economy.
“..while Facebook has published a ‘white paper’ on these projects, the scant information provided about the intent, roles, potential use, and security of the Libra and Calibra exposes the massive scale of the risks and the lack of clear regulatory protections.
“..if products and services like these are left improperly regulated and without sufficient oversight, they could pose systemic risks that endanger U.S. and global financial stability. These vulnerabilities could be exploited and obscured by bad actors, as other cryptocurrencies, exchanges, and wallets have been in the past.”
“..because Facebook is already in the hands of a over quarter of the world’s population, it is imperative that Facebook and its partners immediately cease implementation plans until regulators and Congress have an opportunity to examine these issues and take action”
“During this moratorium, we intend to hold public hearings on the risks and benefits of cryptocurrency-based activities and explore legislative solutions. Failure to cease implementation before we can do so, risks a new Swiss-based financial system that is too big to fail.”
IT BYTES BACK! says: Seems like Facebook is paying for its past ‘sins’ in the countless past and still unresolved privacy concerns (read: Cambridge Analytica scandal, etc) However the silver lining is that no matter how this pans out, this case of Libra will be THE case citation for the progress of global cryptocurrencies in the face of legacy financial systems.
