The European Central Bank (ECB) is warning all financial regulators that additional tech companies, not just Facebook, are likely to enter the financial markets in the coming years. It’s telling legislators to be wary and to push harder for stronger monetary regulations.
The ECB Is Taking a Stance
Facebook is creating quite the firestorm as of late. It’s entry into the financial and crypto arenas with its new digital asset called Libra has gotten everyone excited, though there are several individuals who are also freaking out about the prospects of such a currency. U.S. members of Congress, for example, are asking Facebook to hold off on its current plans regarding Libra indefinitely so that they can examine all its properties and decide which questions need answering before it comes to full fruition.
Facebook has been riddled with scandals over the past few years, the biggest one being Cambridge Analytica in 2018. The company had been selling users’ private data to third parties for advertising purposes, and many are worried about handing over their financial data to a company that hasn’t respected privacy in the past.
Benoit Coeure, an executive board member of the ECB, says that Facebook and similar companies should not be allowed to enter the financial markets so freely, and must be properly monitored by authorities before they can be permitted to move forward. He states:
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.
For the most part, it would appear regulators still have time to get things into shape considering Facebook Coin likely won’t be released until 2020, a year from now. Financial authorities can potentially get their act together before then if they work hard enough.
But will this happen? That’s a big question that’s probably on everybody’s minds right about now, as many governments and policymakers have been speaking for years about regulating cryptocurrencies but have yet to take any serious action. In China, for example, bitcoin mining is labeled as hazardous to the environment, and is on a list of things to potentially ban for protecting the Earth’s atmosphere. However, mining has remained on this list for some time, and nothing has happened to stop further mining from occurring.
In the U.S., many legislators have discussed the idea of regulating cryptocurrency, though it seems the country is nowhere near ready to act on its words.
It’s Time to Get Moving!
Coeure followed up on his original statement, explaining:
All these projects are a rather useful wake-up call for regulators and public authorities, as they encourage us to raise a number of questions and might make us improve the way we do things.