Facebook made its cryptocurrency announcement on 18th June 2019. In less than 24 hours, Governments around the world asked for a review or a temporary suspension of the project. The Social Media Giant has been called upon to clear the concerns that regulatory watchdogs have.
Moreover, the cryptocurrency has created news all around the world. Reportedly, Chinese citizens have started to take a keen interest in the cryptocurrency. Dovey Wan, an Analyst, tweeted,
Libra appears on the hot searches of ImToken, biggest Chinese crypto tracking app This is the best way to be on the pulse of Chinese crypto scene, many on the list are unknown in the west as “资金盘” – sophisticated designed monetary scam like VDS (this alone deserves a thread)
However, the irony here is that the current regulatory environment makes it highly unlikely that Libra will be made available in China. The primary reasons for it are,
Facebook is banned in China
China has one of the most stringent internet censorship programs in the world. It is popularly known as the “The Great Firewall of China.” The Government has banned numerous social media websites, including Twitter, Instagram, Snapchat, YouTube, and even Reddit.
Nevertheless, the wallet will work separately from social media, and there are 27 other esteemed members of the Libra association, which makes it partly decentralized. This makes it viable for an interception in China. Still, uncertainty around its availability in China is pretty high.
The permissions required by both the Chinese and US Governments
Due to the trade war between the US and China and other adverse economic conditions, Yuan has been falling consistently. Hence, the citizens might be motivated to move their wealth out of the domestic currency. This can influence citizens to move money away from China. Therefore, both the Chinese and the US Government will try to prohibit this.
Gold, Government bonds, Bitcoin are currently providing for such safe havens. Facebook’s Libra is a stablecoin which is backed by a basket of currencies to reduce volatility further.
Dove Wan also noted that,
It’s funny to see how mainland China ppl are excited about Libra, but in fact, its transactions gonna be maintained by a permissioned database which will never be able to freely transact with a non-whitelisted endpoint or RMB fiat gateway in any meaningful way
Furthermore, the US has been prone to imposing sanctions on other countries. Recently, the lawmakers also called upon Facebook’s executive to testify before the US Congress regarding their cryptocurrency plans. It is highly probable that the US lawmakers will try to implement the same with Libra.
Do you think that Libra will be able to succeed in creating an ideal global cryptocurrency? Please share your views with us.