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Cryptocurrency

Can the EU and US Lawmakers stop Facebook Libra cryptocurrency?

Maya Mandzikasvili | Jun. 19, 2019
Can the EU and US Lawmakers stop Facebook Libra cryptocurrency?

June 19, 2019, | AtoZ Markets - Recently, the US and EU lawmakers have expressed an opinion on the soon to be launch Facebook GlobalCoin. The overall attitude of the authorities, however, was not 100% positive. Could the growing concerns of the financial regulators pause Facebook Libra cryptocurrency?

The U.S. authorities to pause Facebook Libra cryptocurrency

A leading U.S. House lawmaker on Tuesday addressed the social media giant to pause Facebook Libra cryptocurrency project. The U.S. authority called on social network corporation to testify before Congress answering to global concerns about the crypto impact on data privacy and security.

The chairman of the House Financial Services Committee Maxine Waters pointed on the fact that social media giant has data on billions of people and has repeatedly shown incompetence in the protection and careful use of its users’ data.

Patrick McHenry, the senior Republican on the Maxine Waters panel also expressed the importance of hearing on the Facebook new project. A social media representative said the company looked forward to answering lawmakers’ questions.

Will the EU regulators pause Facebook Libra cryptocurrency adoption in Europe’s region?

Certain EU officials, including Bank of England Governor Mark Carney, expressed their “open mind” on the potential utility of the product while warning it could face strict regulation. “Anything that works in this world will become instantly systemic and will have to be subject to the highest standards of regulation,” he added.

The financial regulator of Switzerland, where Facebook’s project Libra Networks was registered, said it was in contact with the founders of the Libra project.

The authority, however, did not provide any further details on the meeting. It remains unclear whether social media was obtaining specific regulatory permission or status from the Swiss regulator.

Markus Ferber, a lawmaker in the European Parliament, stated that Facebook GlobalCoin should put “regulators on high alert” and European Commission should start working on the regulatory framework for crypto. European central banker says they have a broader set of concerns.

A quiet skeptical view of top policymakers, signaling that not all European supervisors are convinced the new coin is a good idea.

For example, the French Finance Minister Bruno Le Maire said in a radio interview that Facebook’s stablecoin shouldn’t be seen as a replacement for fiat currencies.

Le Maire is concerned about Facebook GlobaCoin ability to comply with strict money-laundering and anti-terrorism finance rules. He also mentioned serious implications for financial stability if authorities lose control over it and called G7 central banks to prepare a report on Facebook’s project for their July meeting.

German member of the European Parliament Markus Ferber warned that Facebook’s Libra ultimately could yield only a “shadow bank”.

Pause Facebook Libra cryptocurrency to stop its expansion into the global market

Facebook Libro project launch was met with immediate reaction from the global lawmakers and regulators. The authorities noted that Facebook is already too big, powerful but careless with users’ privacy. Senator Sherrod Brown, the top Democrat on the Senate Banking Committee said that they “cannot allow Facebook to run a risky new cryptocurrency out of a Swiss bank account without oversight”.

U.S. Senator Mark Warner, a Virginia Democrat who is also a member of the Senate Banking Committee, believe that through Libra, Facebook was using its scale in social networking to achieve dominance in adjacent markets like mobile payments.

French Finance Minister Bruno Le Maire emphasized the need for more regulation of tech companies. In one of the recent interviews, he explained:

This instrument for transactions will allow Facebook to collect millions and millions of data, which strengthens my conviction that there is a need to regulate the digital giants.

According to the latest reports, Facebook had been in communication with the U.S. However, it remains unclear whether Facebook GlobalCoin would directly fall under any existing U.S. regulatory regimes.

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Disclaimer: The views and opinions expressed in this article are solely those of the author and do not reflect the official policy or position of AtoZ Markets.com, nor should they be attributed to AtoZMarkets.