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It’s only been a couple of weeks since Facebook released its stablecoin Libra’s whitepaper and in tat short amount of time, many regulators from around the world have come out against Libra. Accordingly, a new report by Reuters claims that Libra is going to “run a regulatory gauntlet” as it crawls towards regulatory compliance.
Libra faced immediate backlash from US, German, French, British and Russian lawmakers. The reason for this harsh reaction from the legislative branch is Facebook’s horrible reputation of being too intrusive in its data collection practices and being too careless about keeping that data safe and private.
Barry Lynn, executive director of antitrust advocacy group the Open Markets Institute, termed the current situation “a complete disaster from a regulatory perspective.” He is of the view that Facebook already has fires all over the world with regulators and it is only going to get worse from here. Furthermore, the chair of the Financial Stability Board (a progeny of the G20), Randal Quarles, warned this week that wider use of cryptocurrencies for retail payments needs global scrutiny from regulators.
Facebook has concocted a detailed plan to make Libra as stable a digital currency as possible for those sending money across borders or using it for retail purposes. The report by Reuters explains:
“The plan for Libra involves taking customer deposits, investing them in government bonds, holding traditional currencies in reserves and offering cross-border services and transacting in the new coin will require engagement with central banks, financial regulators and enforcement authorities around the globe.”
Facebook Libra Road to Global Crypto Legitimacy
Facebook has started the execution of its crypto game plan to achieve global regulatory compliance and allow Libra to really spread its wings. The first step seems to be a New York BitLicense. Facebook has also contacted Representatives of the Bank of England as well as Switzerland’s financial regulator FINMA. Facebook spokesperson stated:
“The scrutiny that we’ve seen is something that we expected and welcome. We announced this early by design in order to have this discourse in the open and gather feedback.”
Sean Park, the founder and chief investment officer at Anthemis, a venture capital firm that backs digital financial services companies, said “[…] given their intention to be global, they will ultimately need literally hundreds, perhaps thousands, of licenses from hundreds of different regulators across the globe.”
While a lot of criticism has been directed at Libra, Facebook seems to be prepared for a drawn-out battle with global regulators. With support from a plethora of powerful organizations like Mastercard, Visa, and Uber, and the reach to billions of people from essentially any region on the planet, Facebook seems determined to see Libra achieving its goals.