Today Facebook was grilled on live TV at the US Congress over Libra.
David Marcus, Facebook’s top executive on the project, sought to assuage lawmakers by pledging to work with regulators to address their concerns. “Facebook will not offer the Libra digital currency until we have fully addressed regulatory concerns and received appropriate approvals,” he said in his opening statement.
The senators’ ire isn’t as a surprise to the company, which has been reeling after a series of privacy breaches and questions about its role spreading fake news in the 2016 presidential campaign. Among the skeptics of its crypto plans are President Donald Trump, his Treasury chief Steven Mnuchin, Federal Reserve Chairman Jerome Powell and members of Congress from both parties.
Even as the rhetoric rises, today’s hearing is also focusing attention on how cryptocurrencies should be overseen by the federal government. At least a half dozen agencies, including the Fed, the Securities and Exchange Commission and parts of the Treasury, have some say in the matter but none has taken a lead role.
Brown continued to lay in to Facebook after his opening statement, repeatedly citing how much power the social network wields with its roughly 2 billion users. He told Marcus that it’s “delusional” for Facebook to think consumers will trust it with their financial data after the company allowed Russian bots to influence the 2016 U.S. presidential election, along with other scandals.
So, it’s clear that Libra has had the worst product launch of all time, especially considering that they’re a year or more away from launching it if everything was going to plan.
Jaime Dimon even came out today to say that we won’t see Libra escape this oversight purgatory for at least three years.
So, why is everyone so concerned? What are people saying who aren’t thrilled with the idea?
The world is digesting the news about Facebook’s Libra cryptocurrency and, frankly, there’s a lot of opposition.
The obvious problem with Facebook is most global users don’t trust it with their private data, so how could they trust it with their financial data in the future?
While for Bitcoin enthusiasts, Facebook’s Libra could spark additional cryptocurrency volume, it could have more negative consequences and side-effects than many realize.
Here’s Facebook’s summary in two sentences: “Libra is a global, digitally native, reserve-backed cryptocurrency built on the foundation of blockchain technology. People will be able to send, receive, spend and secure their money, enabling a more inclusive global financial system.”
- By trying to bank the unbanked and vulnerable in developing countries, Facebook’s Libra could be a kind of shadow banking.
- By using a stablecoin to incentivize Advertising consumption, Facebook’s Libra could endanger how the future of the internet is monetized.
- By using the playbook of cryptocurrency tokens, Facebook could compete with and disrupt POS ecosystems who claim decentralization, e.g. EOS and Tron and many others.
- By increasing convenience for token investments and token economy utilization, Facebook’s Libra could replace reliance on fiat currencies,which could have dangerous impacts on the global economy, i.e. in some countries that are inflation prone Libra could disrupt fiat systems, leading to negative economic impacts.
- If widespread adoption occurs, Facebook’s Libra’s cryptocurrency could be part of a master-plan by some for a global digital currency.
- Facebook’s Libra cryptocurrency will face privacy and money laundering concerns that will be imperfectly regulated and nearly impossible to moderate properly.
- The Libra Association could become too powerful in influencing how consumers do payments by forming a monopolistic shadow council on how digital currency adoption and payment standards globally evolve in the token economy.
French Finance Minister Bruno Le Maire said Libra shouldn’t be allowed to become a sovereign currency, while a German member of the European Parliament said Facebook could become a “shadow bank”, according to LinkedIn Editors.
Mark Carney, the Governor of the Bank of England, has recently also had a lot to say about Facebook’s Libra cryptocurrency.
- In some ways Facebook’s stablecoin looks more like a fiat-replacement play than an actual cryptocurrency.
- Facebook’s wants to rule the future of how people have “sovereign digital identities” and Libra could be a P2P payments gimmick to do just that.
- Facebook’s Libra will face tough regulatory scrutiny considering their failing track record on data harvesting, consumer privacy and anti-trust in their iron grip as a mobile and digital Ad giant which has been manipulating users at every stage of their growth.
- Libra will also face push-back from global banks, financial services and cross-border payment competitors whom they could disrupt.
- While Facebook pretends to be a public company, its flawed voting structure means shareholder votes are pretty much meaningless with Mark Zuckerberg having total control.
- Want to have an objective overview of the Libra cryptocurrency? Check out Binance’s research piece.
As ambitious as a Libra cryptocurrency and blockchain are for Facebook, they are not without their serious challenges and opposition.
Democratic Rep. Maxine Waters on Tuesday June 19th, 2019, requested that Facebook pause its development of Libra.
“Given the company’s troubled past, I am requesting that Facebook agree to a moratorium on any movement forward on developing a cryptocurrency until Congress and regulators have the opportunity to examine these issues and take action,” Waters said in a statement.
Libra could be a welcome lift to Facebook’s profits, but its dangers to the world seem very real. Internally also Facebook has some trust issues, as Facebook employees no longer respect or approve of Mark Zuckerberg as they have in the past.
Founding Libra Association members reminds one of how a shadow council around digital transformation and digital currencies might work, if you wanted to implement such a thing. That major Bitcoin and crypto influencers are bullish on Libra is a sign of the times, where what decentralization actually is appears to be lost on the profiteering.
It’s not yet clear how the Libra cryptocurrency will be used to incentive users to force themselves to experience Advertisements, but that’s, I think, a considerably under reported play (INC).
- The Libra Association contains no banks in its initially announced group of partners. This signals that the banks see Facebook’s Libra blockchain as a threat to their business model.
- While Libra has big supporters and is backed by real assets via a Stablecoin basket, the potential for its abuse and damaging the very parties it’s supposed to be supporting is a grave risk in the turmoil that is digital transformation.
- Facebook and the Libra Association are proposing something extremely powerful: a non-state currency backed by a basket of assets. What does that sound like? It sounds like the launch of a global digital currency that can destroy fiat currencies.
So, clearly, Libra is in the crosshairs of many different agencies and governments.Importantly, though it does serve as a poor ambassador of blockchain, it has done a lot of good too in driving interest towards Bitcoin and the rest of the decentralized space.
Time will tell if Libra can prove itself or continue to drown in negative perceptions.