Libra Project Receives Government Pushback

Reading Time: 2 minutes

Libra, the cryptocurrency yesterday announced by social media giant Facebook, has already come up against some regulatory pushback as governments digest the full potential of what the token aims to do. In an echo of what has been happening in the crypto space in general over the past few months, talk of control and regulation came swiftly, with fear clearly gripping governments worldwide as they digested the biggest challenge to fiat currencies since their creation.

Must Not Happen

French Finance Minister Bruno Le Maire told Europe 1 radio station in an interview that said the token shouldn’t be seen as a replacement for the traditional currencies on which the value of the token itself is based, calling on Central Bank governors, guardians of the global monetary system, to prepare a report on Libra for their July meeting, citing concerns over privacy, money laundering, and terrorism financing. How terrorists would use the closed Facebook system to finance their operations or the 100% tracked currency to launder money he didn’t specify, suggesting he might not be in possession of all the facts. Le Maire added that it was “out of the question” that Libra become a sovereign currency, signing off with a line that proved to be something of a rallying cry on social media and might just come back to haunt him: “It can’t, and it must not, happen.”

Libra also faced calls for regulation from Bank of England Governor Mark Carney who referenced it while speaking at the European Central Bank’s annual symposium in Sintra, Portugal. “Anything that works in this world will become instantly systemic and will have to be subject to the highest standards of regulation,” Carney said, although he did add that banks should have an “open mind” about technology that can facilitate cross-border payments. Markus Ferber, a German member of the European Parliament, added his opinions to the mix, saying that Facebook could become a “shadow bank” due to its huge user base, and that regulators should be on high alert.

Libra Could Become a Regulation Lightning Rod

In many ways, Facebook’s ascendency to the world’s most talked about cryptocurrency could be a great thing for the space as a whole, seeing as it might act as a test case for regulation but with the power to fight back. With a defined purpose and timeline for rollout, regulators will have to move fast to act upon it, and whatever the outcomes are could have a huge impact for the entire space as cryptocurrency looks to leverage Facebook’s groundbreaking move.