It appears Facebook’s Libra is finally giving in to regulatory pressure. Following weeks of going back and forth with members of Congress and other world leaders, David Marcus, who heads Facebook’s blockchain division, is expected to announce a halt to the currency’s growth this week until all regulatory questions “have been answered.”
Libra Puts Its Plans on Hold… For Now
Facebook’s Libra has been the talk of the crypto space for several weeks. The company has tried desperately to assure both legislators and users alike that the coin is being developed in an ethical way. Facebook has been riddled with scandal for the past several years, the biggest being Cambridge Analytica in 2018. The company was caught selling users’ private data to third parties for advertising purposes, and users’ trust in the social media conglomerate has fallen through the floor.
Despite its efforts, Facebook has not been able to convince those at the top that Libra is strong enough to keep people’s financial information safe and secure. Rep. Maxine Waters, who heads the House Financial Committee, asked prior that Facebook refrain from building Libra any further until all the currency’s ideals can be fully analyzed, and it appears Marcus and his team are finally succumbing.
Marcus has commented:
We recognize the authority of financial regulators and support their oversight of this project… Overseeing the Libra blockchain and the Libra reserve will be a significant undertaking and responsibility. No single organization can, or should, be solely responsible for it. We believe a cooperative approach is both warranted and necessary.
Trying to put other fears to rest, Marcus has told potential users that the currency will not be controlled fully by Facebook, but by several financial and tech companies that have pledged support – financial or otherwise – to the venture. Among these companies are PayPal, Uber, Visa and Mastercard.
The problem with this is that in the long run, Libra will be designed to run the way these companies think it should, suggesting Libra will be a centralized currency. While Marcus has commented that the asset will be decentralized, this is hard to believe considering power over the coin will not be placed in the hands of its users but rather by the companies behind it.
Several Legislators Don’t Trust Facebook’s Cryptocurrency
Federal Reserve Chairman Jerome Powell has commented that Facebook’s crypto plans give rise to “serious concerns,” while other regulators, such as Bank of England governor Mark Carney, have stated that while they will keep an open mind regarding Facebook, the currency cannot be granted any special privileges, and must be subjected to strict regulatory practices.
The currency’s development isn’t fully cancelled. Rather, it’s simply being postponed until lawmakers have had a chance to examine the currency’s properties in full before its release.