- Facebook on Tuesday unveiled its plan to bring its new cryptocurrency, Libra, to the masses but the critics already have doubts over the launch
- France’s Finance Minister expresses his concerns on Libra saying it shouldn’t become a sovereign currency
- Italy and German Politicians also aired their misgivings, one of them stating that Facebook is likely to become a “shadow bank.”
On June 18, 2019, European Lawmakers raised the alarm a few hours after Facebook announced its new cryptocurrency, branded Libra. Minister for Finance in France Bruno Le Maire told radio station Europe 1 that he didn’t oppose Facebook building up a payment system, but Libra being made a “sovereign currency” is “out of the question.”
Libra could be a regulatory nightmare
Even if Facebook has presented libra as an online currency, Kevin Weill, VP of blockchain product at Facebook told business insider that it has the potential for evolving and moving into financial products such as credit, which are more sophisticated.
Le Maire additionally stated that he would need to be reassured that the payment system would not facilitate nefarious purposes such as financing terrorism.
He also suggested that Facebook could use the new cryptocurrency to get more information about its users compared to what they have already. Facebook affirmed that it would not have access to, or target ads using the financial data that Calibra generates- the subsidiary they created for Libra management.
Facebook already on thin ice with EU regulators
Markus Ferber, a German member of the European Parliament, said that Facebook is likely to turn into a ‘shadow bank’ as a result of the new currency which should be a big concern for regulators. Francesco Boccia, a politician from Italy also aired his misgivings regarding Libra joining the cryptocurrencies already in existence without being regulated.
Regulatory bodies scrutinizing Facebook’s cryptocurrency proposal still have the potential to slow down Zuckerberg even if companies such as Uber, Mastercard, and Andreessen Horowitz seem to be among the “founding members” of Libra.
John Lambert, Mastercard’s executive vice president for digital solutions, told Reuters that they might fail to launch the project in case it experiences too much regulatory pushback.
Giovanni Buttarelli, European Data Protection Supervisor, also had reservations about Facebook pushing into cryptocurrency, in an exclusive interview with Business Insider Germany.