While cryptocurrency may still seem somewhat oblique in mainstream circles, the growing interest is hard to deny. Facebook is trying to capitalize while the iron is hot with its proposed cryptocurrency, Libra.
While Libra has been in development for over a year, it may appear to be a poor time for Facebook to be pushing its agenda. The company has been in the spotlight for the past several years for a slew of controversies, including antitrust, privacy violations, election security, and allowing disinformation to spread on its platform.
So why does a social media website need cryptocurrency anyways? Besides perhaps seeing a niche in the market through their influence and wealth, Facebook CEO Mark Zuckerberg has always had a fascination with the digital currency.
As the company began to move forward with its plans for Libra, they brought on 27 partners to help establish legitimacy for their project. Of that original number, only 21 remain.
Despite their ‘full-steam-ahead’ attitude, big partners such as PayPal, Visa, and Mastercard have stepped away from the project. It’s also facing serious doubt from both regulators and lawmakers in the United States and countries such as France and Germany.
To combat this, it is reported that at least eight lobbyists have been dedicated to promoting Libra since it was introduced in June.
The efforts don’t seem to be helping much, as of yet at least. Both Democrats and Republicans have expressed concerns about the company and its practices.
Rep. Lance Gooden (R-TX) criticized the company’s choice to base itself out of Geneva, stating, “There is an impression that perhaps Facebook wants a clean start somewhere else because they haven’t enjoyed criticism to their social media platform, but Democrats and Republicans agree that criticism of the social network is entirely justified.”
There have also been concerns about how the company will manage issues such as money laundering, cybersecurity, and criminal activity.
When Facebook announced Libra, they only provided a rough draft of what the cryptocurrency would look like. This drew harsh criticism from President Trump and his Treasury secretary, Steven Mnuchin.
Lael Brainard, the Federal Reserve official responsible for overseeing cryptocurrency policy, also weighed in with her concerns that private currencies such as Libra could create dangers for large economies and weaken the power of central banks “by increasing market volatility and by transmitting shocks across borders.”
The head of Facebook’s cryptocurrency effort, David Marcus, is taking the criticism in stride. “Even if we spent 10 years outreaching, you’d still hear the same thing.”
He added that they have been working with regulators to ensure that the kinks are ironed out, saying, “We didn’t launch anything. We opened up the idea that maybe it was a good thing to try to do something new to advance the state of access to digital money in general.”
He also stated that the Libra plan had received a much more positive reception in private meetings with regulators.
In fact, Facebook announced that half of its Libra backing would come from the US dollar, indicating strong interest from American investors.
The euro would represent 18 percent of their backing, with the rest coming from the Japanese yen (14 percent), the British pound (11 percent), and the Singapore dollar (7 percent). Chinese currency was not included in the backing.
Despite the controversy, Facebook is moving forward with a launch date for Libra sometime in 2020. Whether or not that gives them enough time to work out both political and security issues remains to be seen.