Global regulators are increasing their scrutiny of Facebook’s new cryptocurrency project, Libra, with data protection worries being cited among the “host of challenges” posed by the financial venture.
This week, head of the global Financial Stability Board (FSB), Randal Quarles, said that “possible regulatory gaps should be assessed and addressed as a matter of priority”.
Representing all major global financial centres, the FSB’s concerns are built upon broader alarm at the potential for cryptocurrencies to take over domestic monetary systems. Problems such a scenario might present relate to data privacy and cyber-security, as well as financial stability, consumer and investor protection, terrorist financing, fair competition and tax evasion.
The FSB will now study global regulatory solutions in more detail in April 2020, Mr Quarles said, with a final arrangement to be proposed for global adoption the following July.
Facebook is continuing to build support for its new digital currency, even after news that Mastercard, Visa, Stripe, eBay and Mercado Pago will not be a part of the scheme. PayPal also withdrew its interest earlier this month, undermining plans unveiled by Facebook in June which promised a new digital currency network in collaboration with tech giants and partners including PayPal, Mastercard, Uber and Spotify.
The big names’ decision to not support Libra will, no doubt, have been fuelled in part by Facebook’s data privacy reputation which has been shredded in recent times by a number of high profile data breaches. In July, Mark Zuckerberg’s firm settled on a $5bn pay out with US data regulators following data processing malpractice uncovered in the famous Facebook / Cambridge Analytica scandal. The social network has also come under fire for committing alleged anti-competitive practices.
Presently, the firm is being examined over a number of antitrust allegations made by the US state and federal regulatory bodies. Speaking to the Financial Times, a source said: “Some companies’ entire business models were publicly threatened by incredibly powerful senators, who threatened to subject them to higher levels of scrutiny if they even so much as had a Libra node on one of their servers.”
Libra’s co-architect, David Marcus has said that he and his team are continuing to prepare the digital currency for launch irrespective of naysayers in the political and regulatory domains.
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