19 Jun 2019
AP — Facebook is getting a taste of the regulatory pushback it will face as it creates a new digital currency with corporate partners.
Just hours after the social media giant unveiled early plans for the Libra cryptocurrency, French Finance Minister Bruno Le Maire insisted that only governments can issue sovereign currencies. He said Facebook must ensure that Libra won’t hurt consumers or be used for illegal activities.
“We will demand guarantees that such transactions cannot be diverted, for example for financing terrorism,” he said on Europe-1 radio.
Facebook unveiled its much-rumored currency Tuesday and said it will launch publicly early next year with such partners as Uber, Visa, Mastercard and PayPal.
Libra could open online purchasing to millions of people who do not have access to bank accounts and could reduce the cost of sending money across borders.
Libra poses new questions for Facebook: Given that cryptocurrency is lightly regulated now, if at all, how will financial regulators oversee Facebook’s plan? And just how much more personal data will this give the social media giant, anyway?
A ‘RUDE AWAKENING’ OVER REGULATION?
The financial industry is more heavily regulated than internet companies — especially in the U.S., where tech companies have often been given free rein.
Companies creating Libra are in for a “rude awakening” if they expect the same model of light regulation, said Karen Shaw Petrou, managing partner of Federal Financial Analytics in Washington.
She expects Libra will fall under U.S. regulations adopted in the wake of the 2008 financial crisis. Which agency will oversee the venture will depend on what the currency system does, she said.
France’s Le Maire said he asked central bank chiefs from the G-7 countries to produce a report by mid-July laying out “guarantees that we must set … to assure us that there are no risks of illicit financing or for the consumer.”
In the U.S., the head of the House Financial Services Committee wants Facebook to suspend plans for a new currency until Congress and regulators are able to study it more closely.
By Rachel Lerman, AP, 18 June 2019
Read more at the Associated Press
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