If it does launch, it probably won’t be anything like what was originally proposed by the world’s largest social media platform.
More proof that all is not great with the ambitious crypto-related project surfaced Friday. Financial Times reports that original backers are trying to distance themselves from Libra. Some are even considering cutting their ties altogether.
What’s worrying these unnamed investors? Regulators throughout the world who are increasingly scrutinizing the effort.
Word on the Street about Libra
Financial Times reports that two of the project’s first backers told the news outlet that they were concerned about the regulatory spotlight.
One said they were worried about publicly supporting Libra for fear of attracting the attention of agencies that oversee their own businesses. One person worried that it would be difficult for partners who want to be seen as being in compliance (with their own regulators) throw their support behind Libra.
In classic Facebook “we’re not the problem” attitude, FT reports Facebook’s response has been it’s exasperated. One backer said Facebook is tired of being the only one putting its neck out.
Backers are also reportedly worried about what steps should be taken next in light of the regulatory angst. Even more telling is the concern that Facebook unwisely went full-speed ahead with Libra without seemingly a care in the world that regulators would raise a stink.
Right off the bat Facebook’s Libra drew ire
Facebook has developed the offputting reputation of being extremely careless in protecting users’ data. Privacy breaches plague it regularly, so the thought that the unregulated platform could responsibly handle a digital currency and other people’s money is quite laughable.
Regulators may have kept their laughs to themselves, but they’ve been very vocal in expressing reservations about Libra. Just this week, EU antitrust regulators indicated they could formally investigate Facebook’s Libra cryptocurrency in the near future.
Several U.S. Congress members immediately cried foul, calling for Facebook to pump the breaks. Then came word that the Swiss watchdog Facebook claimed would oversee Libra hadn’t heard a peep from the California-based company.
Monetization first; serving underbanked second?
David Martin has watched Libra’s developments. The chief compliance officer and founder of Crypto Clarity LLC said:
“I would imagine [Libra] does far more for Facebook’s bottom line in monetizing all of its platforms with the Libra addition than it does to bank the unbanked population. It’s understandable their partners may be spooked due to the level of negative feedback received from regulators around the world and shows the importance of working with regulators at this level.
“This endeavor would leave any regulator with a multitude of questions about the endeavor’s regulatory compliance, fraud prevention, and, specifically to Facebook’s past, privacy concerns.”
Charley Moore, CEO and founder of Rocket Lawyer, said:
“The financial industry is among the most regulated sectors worldwide. Facebook Libra showed us that regulators are worried about blockchain and cryptocurrency. Specific regulated issues potentially implicated by Libra range from anti-money laundering and money transferring to securities and data privacy.”
He added that Facebook’s entry into crypto and blockchain could positively affect the space, saying:
“[It will] undoubtedly attract the regulation that will create guidelines for this emerging industry but also push innovation forward.”
Concerns mitigate optimism. Take Adalberto Flores, CEO of Kueski, for example.
“It is a great step to providing people with access to safe and secure banking, but are we ready to supersede regionally specific monetary policy? Let’s be excited, but let’s also think through it.”