Facebook has not had an easy ride in gathering support for its planned cryptocurrency, Libra. Regulators in US and Europe have not only openly stated their concerns about the currency and the threat it poses to the stability of central banks and national currencies, but they have also been pressuring companies in the finance and e-commerce sector who had already expressed their willingness to work with Facebook. The objective of this pressure appears to have been to make them drop their support towards Libra, resulting in Facebook to lose the support of Visa, Mastercard, Stripe, PayPal and eBay among others, leading to a loss of around a quarter of its original partners in recent weeks. From the original 28 members of the Libra Association, there are currently 21 companies left.
The most recent response from Mark Zuckerberg, Facebook’s CEO is to have become more cautious in approach, currently considering a guarantee that the company will not launch the Libra stablecoin until it has received its approval from all the corresponding regulators, and very specifically, making reference to not launching Libra anywhere in the world until the US regulators have granted approval. This last claim has been taken from his remarks addressing the US House Financial Services Committee on October 23rd.
Seeking to reassure the US regulator among others, Zuckerberg is expected to explain how Facebook intents to separate its decision-making processes regarding Libra, and the role of the Libra Association to ensure the project is led properly with appropriate accountability measures. He will also seek to convince the regulator that Libra is simply an online payment system that facilitates the transfer of money from one person to another; in relation to this, Zuckerberg is known to have claimed that it should be easy to move money as it is to send a text and that Facebook is simply providing a service for people to send and receive money without it costing too much.
In the meantime, in Europe, France appears to be leading an anti-Libra effort along with Germany, Italy, Spain and the Netherlands. According to a report by Politico Europe, the political news publication, these countries’ finance ministers presented their unified position against Libra to other EU ministers in Brussels on 28thOctober with the aim of preventing Libra from launching in Europe and increasing pressure on members of the Libra Association to give up on the project. However, the EU cannot simply ban Libra as it requires a legal reason to do so, and it appears that EU officials have also raised concerns that over-rigorous measures might result in a negative on the development of new technology enterprises in the EU.
While arguments rage around Libra, and there are divergent opinions as to the benefits and disadvantages of the stablecoin, there can be no denying that Facebook’s attempt to enter the world of crypto has resulted in a growing awareness of the issues, and the potential of the blockchain technology that underpins cryptocurrency.