Consumers
using Libra will very soon be able to make purchases, according to Facebook. The
number of purchases will be limited at first. Zuckerberg believes that Libra
would “extend America’s financial leadership as well as our democratic values
and oversight around the world.” He further emphasized that if the U.S. doesn’t
develop a cryptocurrency like Libra, then China would.
Calibra,
with other members from the non-profit Libra Association will manage the coin
together. However, some of the companies that had originally signed onto the
project have reportedly begun quitting, including PayPal, eBay, Visa and Mastercard.
And recently, lawmakers started to grill Zuckerberg on Libra’s issues. The
cryptocurrency has drawn heavy scrutiny from lawmakers since it was revealed. What
are the issues? Why would PayPal and the others withdraw from Libra? What are
the lawmakers worried about?
U.S.
Treasury Secretary Steve Mnuchin raised concerns that the coin could be used
for money laundering. Tax avoidance, drug dealing, or terrorism, could also go
undetected. President Trump argued that Facebook should be required to obtain a
banking charter to move forward with its plan. Democratic lawmakers have also
taken issue with the cryptocurrency — Rep. Maxine Waters of California proposed
legislation that would prohibit major tech companies from becoming financial
institutions or offering cryptocurrencies. The fear is that if a group with
such power as Facebook with its 2.4 billion users enters the financial market,
the stability of this market could be at risk. What's more, that could stifle
the role of the dollar as the world's leading currency. And that would have
dramatic consequences for U.S. foreign policy.
Many
sanctions against unpopular regimes or dictators work because of U.S.’s
currency lever. In a digital currency world these sanctions would probably not
work anymore. Whether money laundering or terror financing, if money flows are
not transparent, things could get out of control.
And
can we trust Facebook with our financial data? At a recent hearing (23 Oct
2019) in the House Financial Services Committee, Facebook said that no data
from Calibra, would be shared with the social network. But we need to be
reminded that Facebook was recently fined $282,000 by Turkish authorities for
violation of data protection laws. And close to 50 million users had their
personal information exposed in an attack on its computer network in September
2018. So the upshot of the matter is security, abuse and sheer power of
Facebook. With no regulatory authority to oversee it is answerable to none if
it goes forward with Libra.
Reference:
1.
JacobPassy, Why Facebook’s Libra coin could become a big pain in your wallet www.marketwatch.com/
3.
Lisa Eadicicc, Lawmakers just grilled Mark Zuckerberg about his company’s big
plan to upend the way we send money around the world www.businessinsider.my
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