In June Facebook announced that they are about to release its own cryptocurrency next year. The social networking company and 28 other partners, including Mastercard, PayPal Holdings and Uber Technologies, will set up the Libra Association to manage the new currency.
Libra is expected to be launched in the first half of next year. It is built on a currency asset basket base to avoid the sharp fluctuations that are typical of Bitcoin and other cryptocurrencies.
Facebook’s has so far failed to meet authorities’ expectations
However, several stakeholders, including G7 finance ministers, have expressed concerns about Facebook’s plans to create a global cryptocurrency, as such virtual payment instruments are often linked to money laundering and illegal activities.
On August 6th, Authorities in the EU, US, UK, Canada, and other countries have asked Facebook in an open letter to explain how the company intends to protect Libra users’ personal information and have demanded a guarantee from Facebook that users’ financial data will be protected by the introduction of the Libra cryptocurrency.
The letter states that Facebook’s practice has so far failed to meet authorities’ expectations, citing the “Cambridge Analytica” scandal as an example. The British political consulting firm Cambridge Analytica is suspected of illegally collecting data from up to 87 million Facebook users.
The letter states that the Libra project carries similar risks.
“Combining extensive reserves of private information with financial information and cryptocurrency increase our privacy concerns”.
Authorities have requested that Facebook provide assurances that users’ information, such as transfer history, will not be used without their consent, and that all parties will adequately protect personal data.
PayPal leaves Libra
However international payment company PayPal has announced its withdrawal of support team for Libra.
PayPal released its statement Friday, October 4, after the closure of US stock exchanges, without disclosing specific reasons for its decision to leave the Libra Association.
News agency Bloomberg and other media reported this week that strong political opposition and concerns from regulators could scare away some of Facebook’s partners in the Libra project.
It has been said in the media that Visa, Mastercard, and Stripe are also considering moving away from a cryptocurrency project.
“Libra is not welcomed in Europe,”
On Friday, October 18, French finance minister Bruno Lemer said:” France, Italy, and Germany are working together to block social network Facebook’s new cryptocurrency Libra in Europe”.
“Libra is not welcomed in Europe,” the minister told reporters at the annual meetings of the World Bank and the International Monetary Fund. “We will take steps with Italians and Germans because our sovereignty is at stake.”
The release of the cryptocurrency “Libra” is expected next year.
“It’s a political message that’s important,” he added.
The minister said Libra would be supported by currency and an active basket.
“Facebook will only need to decide to use more or fewer dollars or euros to influence the euro and the dollar exchange rate, and thus have a direct impact on trade, industry, and countries using the dollar or euro as their base currency,” the minister explained.
It could be detrimental to monetary policy and affect the effectiveness of governments, he warned.
“Do we want to put monetary policy into the hands of a private company like Facebook? My answer is No,” the minister said.
Lemmer, however, stated that he did not object to the digital currency that France could develop “within Europe”.
“The correct answer is not a private digital currency, which is under the control of a multinational company, one of the largest on the planet,” the minister said, referring to Facebook with its more than two billion users.