Facebook’s Digital Coin Libra Faces Extreme Criticism

Cryptocurrency

Libra, Facebook’s cryptocurrency to be launched as a payment service provider, requires close examination. According to a senior official at Britain’s financial watchdog, this new coin project requires deep scrutiny as it raises questions both on social and legal grounds. Facebook unveiled its Libra digital coin last month as a platform that will let one buy things or send money to people with nearly zero fees.

Regulators Have Doubts About Libra

One would pseudonymously buy or cash out their Libra online or at local exchange points like grocery stores. However, soon after its announcement, Libra raised concerns over its potential impact on privacy from lawmakers and regulators around the world.

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According to Christopher Woolard, executive director of strategy and competition at the Financial Conduct Authority, Libra’s “size and scale will pose questions for society and government more generally about what is acceptable and desirable in this space. Historically, this may have been a sector that has lived by the mantra of ‘move fast and break things,’ but the issues raised here require deep thought and detail.”

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Deep Thought and Detail Needed

Since the time of its pronouncement, Libra has faced extreme skepticism and is likely to face severe regulatory scrutiny as well. Scheduled to launch by the end of June 2020, Libra is not only Facebook’s entry into one of the least regulated areas of finance, but will also eventually cede control to an independent consortium of over 100 companies, with players like MasterCard, Visa, Uber, and Spotify already having tentatively signed on. However, the fate of Libra depends much on the response of the domestic and international financial regulators and monetary authorities.

According to the news, the FCA has already met Facebook to discuss the project at large, but there are still several questions that require answers as to the workings of Libra. A detailed report on how this cryptocurrency would operate is quintessential for Libra’s blooming. Crucial decisions on such projects lie with lawmakers and the Bank for International Settlements (BIS), an umbrella group for central banks. Politicians need to quickly coordinate regulatory responses to new risks as Facebook and other tech firms move into finance, the BIS said last month.

Featured image: DepositPhotos © nazarenko

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