Libra manages to get into another controversy within a few weeks of its plan of launch. While the US administration opposes the launch of Libra, how does Facebook plan to get out of it?
The US administration is pretty clear with its views on cryptocurrencies. The US Treasury Secretary Steven Munchin opposed the launch of Libra in the US stating it to be a ‘national security issue’ for the US government.
He further added that Facebook’s Libra has to convince financial regulators and ensure high privacy standards.
“Treasury has been very clear to Facebook, bitcoin users, and other providers of digital financial services that they must implement the same anti-money laundering and countering (the) financing of terrorism, known as AML CFT safeguards, as traditional financial institutions,” he stated.
The statements were expected to come ahead of the US president’s tweet which clearly stated disagreements in the launch of bitcoin and cryptocurrencies.
It came when bitcoin was in talks to have an impressive year for its growth. The largest cryptocurrency fell as much as 17% after the president’s tweet was enough to explain how. Facebook will be no exception to the snowball effect of the President’s statement.
How was Libra planned?
Facebook released a huge document giving details of Libra and Calibra and how the cryptocurrency plan to be. It was a bold bid of Facebook to come up with Libra as the global digital currency promoting financial inclusion the unbanked. Unexpectedly, Libra is said to have built decentralization and addressed better privacy in its functioning.
Facebook plans to make it a long-play as it pulls payments into its online domain. Rather than dominating Libra’s future soon after its launch, Facebook takes it slow and steady for its new brainchild.
During a recent interview, VP of blockchain at Facebook, David Marcus stated, “If more commerce happens, then more small businesses will sell more on and off-platform, and they’ll want to buy more ads on the platform so it will be good for our ads business.”
Unlike the case in credit cards, Facebook plans to change what’s typical in the transaction world today. It eliminates the idea of transaction fees while buying or selling through digital payments.
There are around 1.7 billion unbanked people who Facebook sees as potential prospects to turn to Facebook’s digital currency.
How have Facebook officials reacted to the Libra criticism?
Marcus, one of the Coinbase Board of Directors Libra will not be launched unless it manages the necessary regulatory approvals and meets their concerns. However, he also said that If the US doesn’t take initiative in the new digital innovations, others may lead the market.
Libra does not intend to compete with the sovereign currencies. He further added there’s fair transparency and democracy in the decisions of Libra. The customer information will not be shared with Facebook, neither will it be made available for ad advertising. The discussions following the administrative statements by the US officials should make the decision on the proceeding.
Since Facebook’s never misses a chance to be in the news for its controversial currency, not just the launch of Libra, but the other cryptocurrency market may get a shake. The administrative continuous talks on the crypto world may bring about new regulations on digital currencies. Will Facebook manage to come out of the controversial circle? If yes, Libra should be all set to make the electronic and digital transaction “conventional”
– Written by Gauri Ludbe