As Facebook unveiled its cryptocurrency project today, European officials quickly called for scrutiny of the plan, raising concerns over whether the project was sufficiently regulated.
According to comments reported by Bloomberg, French Finance Minister Bruno Le Maire said Facebook’s cryptocurrency, called Libra, must not “become a sovereign currency.”
“It can’t and it must not happen,” he told Europe 1 radio. Le Maire reportedly called for G7 banking officials to issue a report on Facebook’s plan next month.
A German member of the European Parliament expressed similar concerns, according to Bloomberg, saying Facebook was at risk of becoming a “shadow bank” and that companies “must not be allowed to operate in a regulatory nirvana when introducing virtual currencies.”
Facebook is positioning Libra as a financial system closely tied to the company’s services, including WhatsApp and Messenger. A nonprofit has been set up to oversee Libra, which Facebook says will launch in 2020. Several big names in tech and banking have also signed on to the project, including Mastercard, Visa, Spotify, Uber, and Lyft.
Facebook did not immediately respond to a request for comment.
The social network has faced intense scrutiny around the world over its privacy practices, especially in Europe, where regulators have taken a tough stance toward the tech industry. The creation of an alternative digital currency will likely raise new concerns for governments, as Facebook moves to convince its billions of users to adopt Libra.
Comments
Regulatory Nirvana!
By mattewan on 06.18.19 11:23am
"Only those of us in control of the current monetary system – us bankers, economists, bureaucrats – should have and retain control of the monetary activity of everyone in the world."
By llort on 06.18.19 11:24am
is it a quote? where is it from?
By okh on 06.18.19 11:28am
Yeh, that attitude bothered me a bit. ’Can’t without consumer safety’ would have been OK, but outright ’can’t and must not’ is a bit weirdly controlling, even if it is creepy Facebook.
By scooby359 on 06.18.19 11:30am
I think the concern is pretty understandable. Companies and individuals already commit a far amount of financial midsealings, weather its fraud or money laundering.
The EU dont want facebook opening up another easier route for shady dealings.
By scoob101 on 06.18.19 11:51am
Oh I agree, by the way. Some amount of oversight is a must. But can’t shake the feeling that the established order in terms of financial systems, which has been under threat of disruption ever since blockchain became a verb, is going to do everything in their power to block, thwart, prevent, disrupt, destroy any attempts at competition.
By llort on 06.18.19 1:04pm
"It can’t and it must not happen,"
I know that FB is bad… but It’s regulatory overreach like this that makes me actually hope that they succeed.
By Gayang3 on 06.18.19 11:34am
Why do you classify this as overreach? Given what happened in 2007 with "traditional" banks, I think what you consider to be overreach should be the default position.
By scoob101 on 06.18.19 11:55am
The whole point is to:
1. Prevent money laundering between illegal organizations, sanctioned entities like Iran, etc.
2. Prevent companies from creating a massive ponzi scheme like 2008 easily
3. Prevent any GDPR violating shenanigans where facebook now gets to suck up financial data it has no right to under EU Law without full user consent, etc, etc.
By SirBacon on 06.18.19 12:02pm
Also make sure people pay their taxes so we can have things like schools, hospitals, roads and all sorts of other common infrastructure.
By RightBrain on 06.18.19 1:42pm
You should absolutely not want this to happen. These companies have set up a rival currency that mimics that of a sovereign nation with built in incentives to destabilize the currencies of current nation states. If this succeeds, it’s game over. They will directly compete and replace our individual currencies with one owned by corporations. They would effectively own every one of us. It would be a dystopian nightmare. I can’t believe they had the hubris to even try this.
By NuckingFutz on 06.18.19 1:04pm
Except you do realize that there is an entire swathe of population who do want an alternative to the ‘established order’ which nearly crippled the global economy in 2008 and perpetuated a gigantic wealth transfer while those in power and control walked away scotr free, right?
Currencies work because of trust. Faith in the system and a near certainty that the legal tender will be universally valid. Post 2008, a fair amount of people saw that trust evaporate (in addition to their savings).
This is not to say there should be zero oversight and regulation of these private companies, but obviously the writing seems to have been on the wall once blockchain got popular. We’ll see how this evolves.
By llort on 06.18.19 1:09pm
Private companies are cause of the 2008 collapse. They ran around freely cooking their books. The lack of regulation is what allowed them to run wild.
To this day they still spend millions lobbying to revoke regulation so they can go back to overinflating their value, shit they were upset that they actually had to prove on a recurring basis that their banks could survive a small "bankrun".
What stops Facebook & co from massively inflating the assets backing their "cryptocurrency" otherwise?
By SirBacon on 06.18.19 2:30pm
What companies? What book cooking? Its corrupt politicians that let this happen. Companies will always do whats in their interest all they give a damn about is the bottom line. Politicians or lets use the word that should actually describe them: People’s representatives. They should be looking out for the wellbeing of the population and counter the never ending desire and hunger of the private sector.. But they are no longer people’s representatives they are professional politicians concerned with their own pockets. The private sector hasn’t changed they are the same wolves they have always been its those who should defend us that have failed to do so.
From 1933 to 1999, investment and commercial banks were legally separated and could not be owned by the same holding company. On November 12, 1999, President Clinton signed the Financial Services Modernization Act that repealed Glass-Steagall , France was one of the first to abolish this distinction, with the Banking Act of 1984, thus establishing the principle of universal banking.
P.s. none of these old laws have been reintroduced nor any equivalents, nothing at all prevents another exact replica of the 2007/08 meltdown. And France here trying to act as if standing on some moral high ground pff.
By SDE Bellisarius on 06.18.19 8:01pm
Exactly! As someone who isn’t impacted by, say, the downsides of social media (at least not the way I see it), I have far more fear of big banks and the financial cartels. Yet they’ve been completely ignored in this election and news super cycle. Pathetic.
By llort on 06.19.19 9:09am
And there will be none. The biggest takeaway from the 2007/08 meltdown and aftermath was that there is absolutely no political will to challenge big finance.
Last time such a meltdown occurred we got the Glass-Steagall act (in 1933 ) this was to make sure the bankers could not fuck us all up like that again. This time not only were bankers left scott free but no new laws or regulations were introduced to prevent a repeat. THAT should tell you where we stand and where the government stands. Henceforth politicians will look out for their new masters and the ppl will keep taking the fall and paying up bailouts when the rich want to cash out.
By SDE Bellisarius on 06.19.19 7:31pm
The people have a say in their national currency though. Why should the alternative be something with even less accountability?
By Zecharixs on 06.18.19 2:53pm
ALL nations mentioned in this article have privately owned central banks, the ppeople have 0 influence on their policies or actions. Even worst the GOVERNMENTS of these nations themselves have NO influence or say in the workings of their central banks.
https://m.youtube.com/watch?v=Xbq1QkPuR0w
This goes for all central banks all over the world in all democracies.
By SDE Bellisarius on 06.18.19 8:08pm
Hm…
I only.checked the German central bank.
For sure it is not privately owned (such as the FED) and the government and parliament nominate its board members
In other EU MSs, central banks are less independent.
The Bank is represented by its executive board. Of its six members, half are nominated by the Federal Government and half by the Bundesrat (Germany’s upper house of parliament), and all are appointed by the German President. The Bundesbank is independent of instructions from the Federal Government. Its status is thus comparable to that of the Federal Constitutional Court.
By Sesquatch Hegyi on 06.19.19 8:00am
Lol thats EXACTLY how it is for the FED. in the US the government ratifies the FED chairman and governors but thats it. Infanct im not even sure if they get to place any candidates, im believe even placing candidates is done by the banks who own the FED. and i would not be surprised its the exact same thing in Germany. Infact i cant begin to believe how germany would have a different system, comsidering why ww2 started and who ruled there for over a decade after the end of the war.
By SDE Bellisarius on 06.19.19 7:18pm
Facebook has an incredible power already through their unaccountable algorithms. No doubt cash offers will be eliminated as potential fraud and Facebook cash will be your only method of payment.
As for all the libertarians, Facebook is not a sovereign and should not be allowed to act like King Zuckerberg. This is another step on the way down to despotism: unelected, irresponsible and unaccountable. We have too much of that already.
By nico_mach on 06.18.19 12:31pm
"Your account is temporarily locked for posting messages that breach our terms and conditions. All your assets and accounts will be frozen for 4 weeks while we review this further".
Convince me otherwise?
By CHeif_Eagle on 06.18.19 11:37pm
"You have purchased XXL double ended vibrator. Would you like to share this with your friends for a 15% discount?"
By CHeif_Eagle on 06.18.19 11:38pm
That could only happen if you use Facebook, or a similar Companies Wallet. There should be plenty of wallets that don’t even ask for proof of identity.
By Ekana_Stone on 06.19.19 8:06pm