Facebook’s Libra prompts reaction from European, US authorities

Facebook’s Libra prompts reaction from European, US authorities

Facebook’s Libra prompts reaction from European, US authorities

After months of speculation and anticipation, US social media giant Facebook yesterday unveiled its cryptocurrency project Libra, a digital coin backed by a basket of low-volatility assets and running on a proprietary blockchain. The coin is expected to be launched in the first half of next year, but it has already encountered some resistance from authorities in Europe and the US.

As reported by Bloomberg yesterday, the French finance minister Bruno Le Maire, opined that Facebook’s upcoming digital coin could not become a sovereign currency.

“It is out of question,” Le Maire said, as quoted by Bloomberg. “It can’t and it must not happen.”

Bank of England governor Mark Carney also commented on Libra during the European Central Bank’s annual symposium in Sintra, Portugal. Carney said that regulators need to approach the project with an “open mind”, but indicated that there would be a coordinated effort between regulators to examine the technology.

“Anything that works in this world will become instantly systemic and will have to be subject to the highest standards off regulation,” he also said.

Meanwhile, Markus Ferber, a German member of the European Parliament warned that given Facebook’s massive user base, Libra might put the social network in a position to become a “shadow bank”, so regulators should be on high alert.

US lawmakers react to Libra

Meanwhile in the US, the head of the House of Representatives Financial Services Committee Maxine Waters has asked Facebook to temporarily stop development on the project. Waters expressed concerns over Facebook’s “unchecked expansion” and the lack of “clear regulatory framework to provide strong protections for investors, consumers and the economy” when it comes to cryptocurrencies, industry website Coindesk reported. This sentiment has been echoed by other US lawmakers. Waters urged Facebook to testify before the committee.

A Facebook spokesperson said that the company “look forward to responding to lawmakers’ questions as this process moves forward”.

Featured image: Ink Drop / Shutterstock.com

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