American Lawmakers Want Facebook to Put Brakes on Libra

Ann Santiago
June 20, 2019

Calibra will launch its own digital wallet, sure, but it's also going to be built into Messenger and WhatsApp.

Unlike a crypto such as Bitcoin, Libra is a stablecoin backed by real-world assets, meaning holders have "high degree of assurance" that they can convert coins into traditional currency based on an exchange rate.

"And that´s what is super exciting for the crypto industry, is somebody comes along who understands user experience and has billions of users that they can roll this out to".

However, consumer privacy concerns or regulatory barriers may present significant hurdles for Facebook, whose services already boast more than one billion users.

Along with Facebook, Libra is backed by 28 companies and nonprofits that include finance and tech giants such as MasterCard and Uber.

The madmen actually did it. Facebook today announced that it's forming a new subsidiary focused on financial services, Calibra, and that its first application will be a mobile app through which people can manage everything involving the Facebook's cryptocurrency, Libra.

Maya Zehavi, a blockchain consultant and entrepreneur, said Facebook appears to be using "magic blockchain buzzwords" to encourage trust about a product with few of the transparency or security guarantees that allowed Bitcoin to bloom.

Facebook assured potential users that they would "be using all the same verification and anti-fraud processes that banks and credit cards use", and that users would be refunded "if someone fraudulently gains access to your account and you lose some Libra as a result". With Libra, though, Facebook is hoping to change that, and so once again Zuckerberg seems to be one-upping the "Winklevii" in their own backyard. "It is out of question" that Libra "become a sovereign currency", Le Maire said in an interview with Europe 1 radio, per Bloomberg.

"Access to financial services is limited or restricted for those who need it most-those impacted by cost, reliability, and the ability to seamlessly send money", the Libra white paper argues.

That said, I detect some scepticism amongst the regulators about the prospects for Facebook's currency in the UK.

"Given the company's troubled past, I am requesting that Facebook agree to a moratorium on any movement forward on developing a cryptocurrency until Congress and regulators have the opportunity to examine these issues and take action", Waters wrote in an official statement after the announcement of Libra.

Operating under the name Libra, the digital asset by Facebook will be used for global payments, according to its whitepaper, released on June 18, 2019. Lyft, Uber, Spotify, and eBay are among the marketplaces that have joined up, with a number of blockchain (Coinbase, Anchorage) and venture capital firms (Andreessen Horowitz, Breakthrough Initiatves) in the Association as well. Merchants around the world are envisioned letting people convert cash into digital Libra coins, which than could be deposited into digital wallets to be used for payments.

Senator Sherrod Brown, the top Democrat on the Senate Banking Committee, made a point that was common in lawmakers' statements: regulators must make sure Facebook users are protected.

The Libra Association will govern Facebook's currency.

Facebook has finally unveiled its crypto project, dubbed "Libra", but is now facing regulatory headwinds.

Nonetheless, Facebook promises not to "share account information or financial data with Facebook, Inc. or any third party without customer consent".

"We can not allow Facebook to run a risky new crypto-currency out of a Swiss bank account without oversight", he said in a statement.

In a recent Youtube video, prominent Bitcoin educator Andreas Antonopoulos claimed that banks like JP Morgan, Citi, and its ilk are likely to feel threatened by Libra, as it removes friction in money, and thus the profits of these institutions.

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