The criticism and the negative response that Facebook is receiving over its’ cryptocurrency announcement is considerable. Nevertheless, a spokesperson for Facebook told the media that it “is something that we expected and welcome.”
The regulators and finance watchdogs all over the world are strongly refuting the project at the moment, leading with the US Government’s hearing on 17th July 2019 and G7 Financial Task Force review. China and other international organizations also raising apprehensions on it.
According to a leading Chinese press release, Peoples’ Daily, Libra posses significant threats to global financial stability and privacy laws. Dovey Wan, a crypto-trader and Analyst from China, translated it for the crypto-twitter community. The press release noted that,
“Facing the question/challenges from central banks and regulatory bodies cross the globe, there is a big question mark whether Libra can actually be launched…”
Governments around the world are looking at effectively outlawing end-to-end encryption. Recently, Trump administration sought to put an end to the end-to-end encryption provided by Apple, Google, and WhatsApp, which only allows users to access certain information. A code protects any third party inferences. Moreover, if Facebook is independently planning to implement this feature with Libra, it will face direct disapproval.
Barry Lynn, executive director of the antitrust advocacy group, the Open Markets Institute, told the media,
“It’s a complete disaster from a regulatory perspective,” said “This is a corporation that’s got fires all over the world with regulators. It’s only going to get worse.”
Cost of Regulatory Compliance
The Financial Stability Board (FSB) of the G20 Association expressed uncertainty over the idea, saying that it will require strict scrutiny from World Governments. Sean Park, Founder and Chief Investment Officer, at Anthemis, a venture capital firm that backs digital Financial Services (FS) companies said,
“They will not get a free pass anywhere, given their intention to be global, they will ultimately need literally hundreds, perhaps thousands, of licenses from hundreds of different regulators across the globe.”
Calibra, a subsidiary of Libra Association that deals with wallets and money transfers, has applied for money-transfer licenses in the United States. It has also registered with the U.S. Financial Crimes and Enforcement Network (FinCEN) as a money services business; a Facebook spokesperson told the media.
For Example, Western Union, a global money transmitter spends a lot of money to achieve regulatory compliance. Reportedly, it has licenses in over 30 countries and regulatory obligations with another 54. It has spent $1 billion in the past five years to meet global regulatory compliances.
Currently, Facebook’s cryptocurrency plans hang by a thread with western countries opposing it and China’s exclusion. Moreover, the scale at which Facebook can affect the global economy is significant and needs to be considered carefully by all policymakers.
Do you think Facebook will be able to launch its cryptocurrency or Central banks will rule that space? Please share your views with us.