U.S., European, and Indian governments have asked Facebook to stop its plans for its newly announced cryptocurrency, Libra, until it addresses questions related to security and other concerns.
Entities Current Stances on Facebook Libra
Legislators from the U.S. and Europe have criticized and pushed back on Libra since Facebook unveiled its plans. Most are concerned about Facebook’s history of data security issues.
Last week, Rep. Maxine Waters, chair of the US House Financial Services Committee, sent a letter to Facebook, asking it to temporarily cease plans to create Libra until it addresses security and privacy concerns. The cryptocurrency will be discussed at a Senate committee on July 17.
France’s prime minister supports Libra if it is exclusively used for transactions. The country does not want Facebook to create a sovereign currency.
At the end of June, more than 30 groups, including the Economic Policy Institute and US PIRG, asked Congress and regulators to issue a moratorium on Libra until many unanswered questions are answered.
Most recently, India announced that it may allow Libra to be traded at all, noting that any entity regulated by the Reserve Bank of India are banned from dealing in cryptocurrencies and virtual coins. India said it is uncomfortable dealing with a private currency, like Libra.
The Basics About Libra
Libra, which is set to launch in the first half of 2020, is a stablecoin that allows people to shop and send money to others for nearly zero transaction fees.
A person buys or cashes out the cryptocurrency online or a local exchange points, like convenience stores, while under a pseudonym of the individual’s choosing. Purchases can be made through Facebook’s Calibra wallet, which will be built into Messenger and WhatsApp, or other third party wallets.
When Facebook made its announcement about Libra, it said it wanted the crypto to evolve from PayPal. It wanted Libra to be easier-to-set-up more accessible, more efficient payment method with fewer fees.
Any consumer, developer, or business will have access to the Libra network. Facebook claims this type of open access promises low barriers to entry and innovation and encourages healthy competition.
What Facebook Plans to Do to Ensure Libra Is Secure
Facebook knew that its track record on security and privacy would likely be an issue. Therefore, when it made its announcement, it said its subsidiary, Calibra, will handle the cryptocurrency and keeps social data separate from transaction data.
Additionally, Libra will be controlled by Facebook and up to 100 founding members. Founders consist of credit card schemes, tech companies, telecommunication companies, venture capital firms, and multi-lateral organizations and nonprofits, including Visa, Spotify, Uber, Stripe, and many others. This also aims to boost security because Facebook and every other member gets just one vote when it comes to decision-making. Therefore, it also is impossible for any single founder to take control of the digital money and how its governed.
To show that privacy also is important, Facebook open-sourced Libra’s blockchain and in pretest, it’s offering a prototype prior to launch to find any potential vulnerabilities.
Though some retailers have begun to accept digital currency, the general public has not fully accepted it as a viable payment method. Now, the added pressure from multiple countries may make the future of crypto looking rather bleak unless Facebook offers up more answers and tightens any potential security loopholes.