Facebooks’ crypto announcement of Libra has had a massive impact on the cryptocurrency markets. Even before its launch, the interest in Libra has already surpassed top cryptos like Ethereum and XRP. Bereft with regulatory concerns, recently, Mark Zuckerberg reaffirmed that they would set it right, no matter how long it takes.
However, the regulatory soup also seems to be thickening for Facebook at the moment. Mario Draghi, the President of the European Central Bank, raised a long list of concerns with Facebook’s crypto plans.
His concerns included cybersecurity, money laundering, terrorism financing, funding crime, privacy, tax evasion, and financial stability.
He told the media,
All these concerns are substantial, and they need to be addressed before the regulators can look at this with genuine positive interest.
The concerns seem to be echoing all around the world. Central Banks all around the world stand the risk of losing their power if Facebook creates a viable currency. Moreover, 2.3 billion user base that Facebook boasts of is a substantial threat to the Central Banks.
Currently, Facebook’s crypto plans have been pushed into a corner. The Libra Association is registered in Switzerland. However, to operate as a global currency, it will require to procure a lost of approvals from regulators around the world. Moreover, even the Swiss regulators recently persisted on Facebook to submit their design for privacy and data protection.
The Libra Reserve management and the fact that Calibra wallets will require KYC and ALM compliances are the biggest hurdles to the project.
Apart from concerns over Libra, he also hinted at a probable increase in inflation shortly. He also warned the EEA about the impending economic crisis. He said,
“the risks in the euro area growth outlook remain tilted to the downside”
How do you think the Central Banks will want to regulate the Libra Reserve? Please share your views with us.