Libra, Facebook’s upcoming cryptocurrency, is in the hot seat again, as politicians and financial institutions warned against its use. And it hasn’t even launched yet.
The social network’s digital token is facing nonstop warnings worldwide, amid ongoing worries about its regulatory implications.
The French Finance Minister on Thursday repeated his stance against the idea of Libra turning into a sovereign currency.
“My determination to make sure that Facebook’s Libra project does not become a sovereign currency that could compete with the currency of states is absolute. Because I will never accept that corporations could become private states,” Finance Minister Bruno Le Maire said in a speech to the French Senate.
Le Maire addressed the Senate as the country prepares a touchy new tax to make tech giants, such as Facebook, Google and Amazon, pay more.
The legislature approved the levy in a move that the U.S. will unlikely keep calm about.
And it doesn’t stop there. The French bureaucrats are not the only ones doubting Facebook’s digital token.
Federal Reserve Chairman Jerome Powell appealed Facebook to stop plans for Libra.
Regulators want more explanation from the social network on sensitive matters, such as privacy and consumer protection.
“Libra raises serious concerns regarding privacy, money laundering, consumer protection, financial stability,” Powell said on Wednesday in congress.
U.K central bank chief Mark Carney restated his stance about Libra. He said Libra has to face the highest standards of regulations.
“It’s either successful or it isn’t. If it’s successful it becomes systemic, because it would involve a very large number of users. If you’re a systemic payment system, you have to be on all the time, you can’t have teething issues, you can’t have people losing money out of their wallets,” said Carney.
The G7 is forming a unit to weigh the risks of digital currencies, such as Facebook’s Libra, to the financial system. The Group of Seven consists of Canada, France, Germany, Italy, Japan, the U.K., and the U.S.
Facebook said Libra is set to launch next year. But these regulatory notices cast doubt if the company can roll out its digital currency on time.
Facebook says a consortium oversees Libra. And it has the backing of Visa and MasterCard.
The social network says its digital token differs from Bitcoin, with the objective to sustain a stable value and foil the volatility felt by the latter.
Facebook touts Libra as a solution for people excluded from the financial system.
The World Bank recognizes that 1.7 billion adults have limited or no access to banking services.
Let’s not discount the moneymaking potential, as Facebook has developed its own digital wallet Calibra. And users can use the currency to transact within the company’s apps.
Facebook will compete with established money transfer firms in the multibillion dollar remittance market.
The World Bank estimates transfers to poor countries reached a record $529 billion in 2018.
Facebook has said it will address policymakers’ questions on its planned cryptocurrency.