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Facebook's Libra Project Is Getting Hammered From All Sides, With Fed Chair Raising 'Serious Concerns'

Federal Reserve Chairman Jerome Powell at House Financial Services Committee meeting on July 10, 2019.
Photo: Susan Walsh (AP)

Facebook's already-troubled Libra cryptocurrency project, which has already run into significant opposition among the US House Committee on Financial Services and the Senate Banking Committee, is running headlong into further resistance from regulators.

On Wednesday, Wired Report, Federal Reserve Chair Jerome Powell told the House that he has "many serious concerns" about Facebook's pivot to finance in the arenas of privacy, money laundering, consumer protection, and the stability of the global financial structure. He added that "The process of dealing with these topics should be a patient and careful one, not a sprint," and that the Libra's possible impact.

According to Wired, the following is the reason for this, because it would be relying on a country based on the Libra platform and oversee its reserve fund, and thus operate on a global financial network outside the world. The usual framework of central banks like the Fed. "(Facebook is working with dozens of partner companies that would be one of the leading voting partners in the association, although it is the most prominent due to its plans to integrate Libra payments via wallet service named Calibra into its sprawling social network.)

Wired writes:

Powell's concerns on the heels of similar comments from top regulators in Europe and Asia. On Sunday, Benoît Coeuré, an executive at the European Central Bank, described Libra as a "wake-up call" to regulators, saying it could not operate in a "void" outside the typical structure of central banks.

… Powell also confirmed that he had met with the world's largest public and private sector. Apparently, many regulators left those meetings unsatisfied. Beyond the EU, regulators in the UK, Japan, and Singapore have been called for greater scrutiny of Libra in recent weeks.

Earlier this week, Facebook Calibra wallet services in India, where authorities may have been implemented. Indian economic affairs secretary Subhash Garg told Bloomberg this week that the "Design of the currency has been fully explained. But whatever it is, it would be a private cryptocurrency and that's not something we have been comfortable with. "

Facebook has hundreds of millions of users in India, which is one of the world leaders in remittances, which makes it fail to launch a serious blow to its global financial ambitions.

Facebook does not work in China, but Bloomberg has reported that officials at the People's Bank of China (PBC), the country's central bank, said: "Libra's effects on lending, monetary policy, and foreign exchange risks in a volatile local currency. , ie people switching from local currency to Libra en masse. According to the Bloomberg report, PBC deputy director of payments Mu Changchun also said that it has to be explained that it will be able to handle money.

Representative Maxine Waters, who has called for a moratorium on pharmaceuticals on pharmaceuticals in the United States. , Wired reported. These regulators are investigating the issue.

Facebook co-founder Chris Hughes, who has switched to becoming an outspoken critic of the massive power company, recently warned in a Financial Times op-ed that "The Libra Association's goals specifically say that ability will encourage 'decentralized forms of governance.' other words, Libra will disrupt and weaken nation states by enabling people to move out of local currency and into a currency denominated in dollars and managed by corporations.

For CNBC, the growing pushback has come out of the industry.

To successfully launch Libra and Calibra, Facebook will have to overcome numerous financial regulations regarding anti-money laundering, money transfer, securities and data privacy, said Charley Moore, the CEO of Rocket Lawyer, a San Francisco company that provides online legal services. Facebook will also have to navigate to these different regions, Nayar said.

"In the U.S. alone, it can differ by city, by state and federal level," he said. "Given the breadth of Facebook's reach and the broad ambitions of the new Facebook coin, it's hard to predict which area will be most challenging for them."

"Many countries are legitimately freaked out about the ruthless amoral Facebook vampire squid having its tentacles jammed into their countries' control of currency and banking systems," early Facebook investor Matt Ocko told CNBC. "I hope to God that enlightened regulators kill this thing in its tracks."

In response to a request for comment from Facebook, Wired wrote, the company directed to a letter by Calibra chief David Marcus to skeptical senators, as agreed with Powell's call for a "patient and careful" approach to launching the Libra project.


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