Facebook Faces Real Political Risk From Libra Cryptocurrency

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Unsurprisingly, Libra has attracted a great deal of attention from politicians and central banks. That could spell trouble for Facebook, which is already facing an array of political and regulatory challenges.” data-reactid=”17″>Unsurprisingly, Libra has attracted a great deal of attention from politicians and central banks. That could spell trouble for Facebook, which is already facing an array of political and regulatory challenges.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="The Fed sees opportunity and trouble ahead” data-reactid=”18″>The Fed sees opportunity and trouble ahead

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Jerome Powell, the chair of the Federal Reserve, appeared before the Senate Banking Committee on July 11. While he discussed a range of issues related to the economy and monetary policy, he gave a great deal of attention to Facebook’s latest venture. Powell presented a veritable laundry list of potential issues and concerns with the new cryptocurrency:” data-reactid=”19″>Jerome Powell, the chair of the Federal Reserve, appeared before the Senate Banking Committee on July 11. While he discussed a range of issues related to the economy and monetary policy, he gave a great deal of attention to Facebook’s latest venture. Powell presented a veritable laundry list of potential issues and concerns with the new cryptocurrency:

“I think we agree that Libra raises a lot of serious concerns, and those would include around privacy, money laundering, consumer protection, financial stability. Those are going to need to be thoroughly and publicly assessed and evaluated before this proceeds …The idea that this would be going into implementation within 12 months, I think, is not going to be proven right. I think we’re going to take more time than that …The size of Facebook’s network means it could be, essentially, immediately systemically important. This should be subject to the highest level, the highest expectations in terms of privacy but also prudential regulation.”

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Facebook hopes to have Libra’s underlying technical architecture up and running within months, and hopes to implement the full rollout of the payments system by next summer. As Powell pointed out in his July testimony, this sounds like exceptionally ambitious timing. ” data-reactid=”23″>Facebook hopes to have Libra’s underlying technical architecture up and running within months, and hopes to implement the full rollout of the payments system by next summer. As Powell pointed out in his July testimony, this sounds like exceptionally ambitious timing.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Powell’s concerns are certainly not without merit. Cryptocurrencies have become notorious for the use in illicit transactions and facilitation of a widespread black market online economy. While Facebook aims to prevent such abuses with Libra, there is ample reason to worry.” data-reactid=”24″>Powell’s concerns are certainly not without merit. Cryptocurrencies have become notorious for the use in illicit transactions and facilitation of a widespread black market online economy. While Facebook aims to prevent such abuses with Libra, there is ample reason to worry.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Facebook fails to warm lawmakers’ cold should” data-reactid=”25″>Facebook fails to warm lawmakers’ cold should

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="In a public post published on July 15, Facebook executive David Marcus promised to work closely with central banks and governments to ensure that Libra would be as safe as possible:” data-reactid=”26″>In a public post published on July 15, Facebook executive David Marcus promised to work closely with central banks and governments to ensure that Libra would be as safe as possible:

“We believe in and are committed to a collaborative process with regulators, central banks, and lawmakers to ensure that Libra helps with the kinds of issues that the existing financial system has been fighting, notably around money laundering, terrorism financing, and more. Libra should improve detection and enforcement, not set these back.”

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Despite his optimistic tone, Marcus received an extremely frosty welcome from the Senate Banking Committee on July 16. ” data-reactid=”30″>Despite his optimistic tone, Marcus received an extremely frosty welcome from the Senate Banking Committee on July 16.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Facebook’s subsequent efforts have thus far failed to melt political sentiments in the months since Marcus’ congressional appearance, with few significant leaders showing much love for Libra. Indeed, a "Keep Big Tech Out of Finance Act" has already appeared in draft form, and could potentially kill Libra before it ever gets off the ground. While it is currently a Democratic bill, Republicans’ increasing coolness toward big tech firms — and Facebook in particular — could leave the social media giant with few allies in this fight.” data-reactid=”31″>Facebook’s subsequent efforts have thus far failed to melt political sentiments in the months since Marcus’ congressional appearance, with few significant leaders showing much love for Libra. Indeed, a “Keep Big Tech Out of Finance Act” has already appeared in draft form, and could potentially kill Libra before it ever gets off the ground. While it is currently a Democratic bill, Republicans’ increasing coolness toward big tech firms — and Facebook in particular — could leave the social media giant with few allies in this fight.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Policymakers express profound anxiety” data-reactid=”32″>Policymakers express profound anxiety

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Libra has sparked a rare display of bipartisanship in an otherwise polarized Washington. During his July 11 congressional appearance, the Fed’s Powell was peppered with anxious questions from politicians on both sides of the aisle. The event caused Barron’s to observe that Congress appears to be more concerned about Libra than it is inflation.” data-reactid=”33″>Libra has sparked a rare display of bipartisanship in an otherwise polarized Washington. During his July 11 congressional appearance, the Fed’s Powell was peppered with anxious questions from politicians on both sides of the aisle. The event caused Barron’s to observe that Congress appears to be more concerned about Libra than it is inflation.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Given its vast economic and social influence, political questions were bound to arise about Facebook’s foray into the crypto ecosystem. The company’s particular status as a key platform of both private and public discourse, as well as its history as a vehicle for alleged electoral meddling in 2016, makes the move an obvious political lightning rod. ” data-reactid=”34″>Given its vast economic and social influence, political questions were bound to arise about Facebook’s foray into the crypto ecosystem. The company’s particular status as a key platform of both private and public discourse, as well as its history as a vehicle for alleged electoral meddling in 2016, makes the move an obvious political lightning rod.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="During a congressional appearance on July 16, Facebook’s Marcus found himself inundated with questions from concerned senators, with Democrats and Republicans showing nigh equal levels of distrust and concern.” data-reactid=”35″>During a congressional appearance on July 16, Facebook’s Marcus found himself inundated with questions from concerned senators, with Democrats and Republicans showing nigh equal levels of distrust and concern.