Last month we talked about Facebook launching its own virtual currency, called Libra. The digital currency received a lot of hype. Three weeks in, some more names are now jumping the bandwagon.
Royal Bank of Scotland was in the news for discussing the possibility of working on the esteemed project. This is big news for Libra as Royal Bank of Scotland is among the biggest banks in the U.K with a market capitalization of over 30 billion USD.
“The conversations with Facebook about our involvement take many forms and shapes,” said one of the bank’s reps. While there isn’t much information about the potential partnership, it will be pretty big for Libra if they get the bank on board.
The Bank of England’s governor appears to be in favor as well. He believes that Libra can “substantially improve financial inclusion and dramatically lower the cost of domestic and cross border payments.”
And The Backlash Continues
Not everyone is happy about the latest developments, though. Regulators and politicians appear to be against the idea of Facebook jumping the bandwagon and entering the crypto market.
The European response
The European Central Bank is pushing for regulators to be more active now that big firms are entering the market. One of the bank’s executives, Benoit Coeure, said:
“It’s out of the question to allow them to develop in a regulatory void for their financial service activities because it’s just too dangerous. We have to move more quickly than we’ve been able to do up until now.”
French Minister for the Economy and Finance, Bruno Le Maire, seems to be against the idea as well. He strongly condemned the currency, stating “it can’t and must not become a sovereign currency.”
As reported by The Blockchain Land, Le Maire urged for a report on the project during this July G7 summit. He expressed concerns about money laundering, privacy and terrorism finance.
India is highly skeptical
The Indian government also appears to be against the currency, and it may even get banned in India. The world’s third largest economy is skeptical of Libra and has shown little interest in allowing the digital currency in the country.
As reported by Bloomberg, the Economic Affairs Secretary, Subhash Garg, said that “[the] design of the Facebook currency has not been fully explained, (…) but whatever it is, it would be a private cryptocurrency and that’s not something we have been comfortable with.”
The government and the central bank have already outlawed cryptocurrencies, banning banks from dealing with them. The government is currently drafting a law with strict penalties.
Interested in India’s stance on cryptocurrencies? Read more here
The U.S wants to examine the stablecoin project further
In the U.S., representatives of the Senate House of Financial Services Committee heard concerns of over 30 advocacy groups, that signed a request that Congress and regulators “implement an official moratorium on Libra development.”
Yesterday, Federal Reserve Chair Jerome Powell said Facebook’s Libra shouldn’t continue development. He called for more information on how Facebook is planning to handle regulatory concerns regarding the stablecoin.
When asked, “If Facebook can’t sufficiently answer your questions about anti-money laundering, Know Your Customer, what would your message be to the banks that provide banking to Facebook, and what would your advice to Facebook be?”
“ … I just think it cannot go forward without there being broad satisfaction with the way the company has addressed money laundering, all of those things. The number of concerns that I list at the beginning, data protection, consumer privacy, all of those things will need to be addressed very thoroughly and carefully.”
Facebook’s congressional hearings are scheduled for July 16 and 17. The announcement was made by the same committee chairwoman, Rep Maxine Waters, who called on Facebook to stop working on Libra until regulators and the Congress had a chance to examine the proposal closely.
Facebook Gives More Explanations
On the other hand, Facebook is busy clearing confusions regarding the currency. In response to chairwoman Waters letter in regards to Libra hearings, he said:
“I want to give you my personal assurance that we are committed to taking the time to do this right.”
David Marcus, head of Calibra, addressed the many concerns and said:
“Facebook won’t have any special responsibility over the Libra Network. But we hope that people will respond favorably to the Calibra wallet [made by Facebook]. We’ve been clear about our approach to financial data separation, and we will live up to our commitments and work hard to deliver real utility.”
He also talked about how the token will start with a few companies at play and eventually get decentralized.
“It was important to start with trusted entities that could operate in a regulated environment and with the operational expertise required to ensure the integrity of the network in its foundational stage. I’d argue that one hundred geographically distributed, industry-diverse organizations are quite decentralized. (…) As a comparison, often the concentration of power in the hands of those running software for mining pools on other blockchains is overlooked.”
In addition to being the head of the wallet Calibra, David Marcus is listed as the co-creator of Libra. His resume is particularly impressive, becoming president of PayPal before being recruited by Facebook Messenger.
China Ready to Compete
China looks at Libra as a major threat. The country is set to launch a massive counter-attack in the form of its own cryptocurrency.
Wang Xin, director of the People’s Bank of China research bureau, expressed concerns over the idea of a group of private companies being responsible for controlling a currency.
“If [Libra] is widely used for payments, cross-border payments in particular, would it be able to function like money and accordingly have a large influence on monetary policy, financial stability, and the international monetary system?”
In order to counteract Facebook’s growing influence, China has sped up its efforts to create an official national cryptocurrency. Mr. Wang has revealed that the Chinese government launched a research group made up of prestigious universities, such as Beijing University and Zhejiang University.
Even the Japanese government has asked Facebook to stop work on the currency. Despite all this, it’s in full gear and is expected to launch in 2020.
Winklevoss twins expected to join Libra?
On the latest developments, it seems as if the Winklevoss twins may be ready to join the Libra Association. Cameron said:
“We’re definitely looking at it in earnest, and we’re excited about the project,” Cameron told CoinDesk Tuesday.
When sharing their views on the project, Tyler mentioned that Libra is the precursor of cryptos:
“Our feeling is, this is the first of many FANG [Facebook, Amazon, Netflix and Google] companies to have a token project. Our prediction is in the next 24 months almost every FANG company will have a coin or be working on some sort of project.”
Despite the long history between the brothers and Facebook’s CEO Mark Zuckerberg, it seems as if the former classmates are willing to join forces in the mutual goals of promoting mass crypto adoption.
This would mean that Gemini would be the second crypto exchange in the Libra Association, alongside Coinbase. This move falls in line with the twins’ goal to diversity Gemini’s token offerings by next year.
Could the regulatory skepticism backlash?
Marcus explained that “Libra” was inspired by three main ideas: the Romain’s unit of weight (Libra in Latin), the astrological sign Libra, and from the French word ‘liberté’. To him, freedom, justice and money are what they’re trying to do with the project Libra.
He’s aware that this is the beginning of a long journey, in which there will be obstacles to overcome, especially as the regulatory backlash only seems to intensify.
According to a report by LendEdu, the new currency will increase usage and attract more investors. According to the survey, Facebook’s virtual currency could get consumers, who have never before invested in cryptocurrency, interested in the market.
There obviously are benefits, but we can’t be sure until it launches.
As regulatory bodies across the world share concerns over people’s privacy protection and global monetary stability, a disproportionate regulatory resistance could have unexpected backlashes.
It could result in a complicated and costly framework that only companies with significant financial and legal resources could navigate. Besides, it can halt innovative projects from taking off.
As the saga continues, we’ll keep reporting on Libra’s developments.