Follow Us:
Wednesday, April 01, 2020

Facebook Libra: Why regulators, governments are not impressed about the cryptocurrency

Facebook looks to unveil its ambitious cryptocurrency Libra by 2020, however, it has to address a list of governing bodies. Here's what regulators and governments have to say:

By: Tech Desk | New Delhi | Published: June 20, 2019 5:18:09 pm
Facebook looks to unveil its ambitious cryptocurrency Libra by 2020, however, it has to address a list of governing bodies.

Facebook has announced Libra, which is a cryptocurrency that it wants to launch across the world by next year. The new Libra coin claims to be safer, secure and less volatile as compared to other cryptocurrencies.  However, even as the proposed launch of the cryptocurrency is some months away, there are a lot of questions being raised around Libra. Here is a look at all the reactions from regulators, governments to Facebook’s big cryptocurrency announcement.

Reactions to Libra from US authorities

The US Senate Banking Committee in a statement released Wednesday said that it will be holding a hearing on Facebook’s cryptocurrency on July 16, 2019. It said that the hearing will focus on “examining Facebook’s proposed digital currency and data privacy considerations,”

Among regulators, a top Democrat on the banking panel named Senator Sherrod Brown is among the lawmakers whois skeptical about Facebook’s security and protection of the consumer’s financial data.  Apart from Brown, US Senator and Chair of the Senate Banking Committee Mike Crapo too had written an open letter to Facebook CEO Mark Zuckerberg last month questioning about the working of the cryptocurrency and Facebook’s consumer protection efforts.

Congresswoman Maxine Waters was quoted by the BBC as saying, “I am requesting that Facebook agree to a moratorium on any movement forward on developing a cryptocurrency until Congress and regulators have the opportunity to examine these issues and take action.”

Reactions to Libra in Europe

In Europe, many regulators and governments have opposed Facebook’s ambitious plans. As per a recent Bloomberg report, French Finance Minister Bruno Le Maire has said that Libra should not be seen as a replacement for the conventional currencies.

“It is out of question that Libra becomes a sovereign currency,” Le Maire was quoted in an interview on Europe 1 radio. Bank of England Governor Mark Carney said, “Anything that works in this world will become instantly systemic and will have to be subject to the highest standards of regulation.”

Carney’s deputy Sam Woods said that launch of Libra may raise regulatory issues adding that across the world regulators might have to think about the best treatment for this new asset class, reported Reuters.

“It does seem clear that something like this could be very important from a regulatory point of view,” he said. According to Markus Ferber, a German member of the European Parliament, Facebook could become a “shadow bank”, and regulators should be on high alert.

Also read: Facebook’s Sandberg says Libra coin is ‘long way from launch’

Libra will not be work in India

Facebook will not be launching the Libra coin in India. Facebook confirmed that Calibra, which is the digital wallet for Libra transfers, will not be available in countries where cryptocurrencies are banned.  The Reserve Bank of India (RBI) has prohibited all its affiliated banks and non-banking financial companies (NBFCs) from directly dealing or providing services to any person or entity for facilitating the trade of any virtual currencies from April 2018. A draft bill also seeks to make trading, buying cryptocurrencies as illegal.

Facebook’s reaction

Facebook COO Sheryl Sandberg in an interview with Bloomberg TV has said that the company’s cryptocurrency is a “long way from launch.” “We know this is a heavy, heavily regulated space. We need to talk to people, meet with people and that’s what we’re doing and we are then going to launch,” she was quoted as saying.

It has been reported by Facebook executive David Marcus, who is heading the digital currency project, will also be testifying in front of regulators. He was also quoted by CNBC as saying that “If people don’t want to trust us (Facebook), they can use any of the other wallets that will be available… There will be plenty of competition.”

📣 The Indian Express is now on Telegram. Click here to join our channel (@indianexpress) and stay updated with the latest headlines

For all the latest Technology News, download Indian Express App.