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Facebook Admits ‘Early’ Libra Announcement in ‘Heavily Regulated Space’

Last Updated March 4, 2021 2:36 PM
Mike Brown
Last Updated March 4, 2021 2:36 PM

By CCN.com: A key Facebook executive has admitted that its Libra cryptocurrency was announced early, amid pushback from regulators.

Sheryl Sandberg, the company’s chief operating officer, indicated to Bloomberg TV  Wednesday that talks are underway. The project is aiming to launch in 2020.

We announced this early. We know this is a heavy, heavily regulated space. We need to talk to people, meet with people and that’s what we’re doing and we are then going to launch.

Regulators Are Pushing Back on Libra

Libra was unveiled Tuesday with a high-profile list of partners, including Visa, MasterCard and PayPal. Soon after the unveiling, regulators came out to express their concerns about its potential effects. With Facebook receiving over two billion visitors, it already dominates social networking.

Libra’s list of partners.

Bruno Le Maire, France’s finance minister, warned Tuesday on radio station Europe 1 that fiat currency needs to remain the instrument of sovereign countries. He asked the central bank governors of the G7 group of countries to report in mid-July on what guarantees they can obtain from Facebook.

The Bank of England’s governor, Mark Carney, also called on the G7 to scrutinize the project in detail. He added in a Bloomberg interview that:

Anything that works in this world will become instantly systemic and will have to be subject to the highest standards of regulation.

Sheila Bair, the former chair of the Federal Deposit Insurance Corporation (FDIC), also raised concerns about the strength of the collateral. She also asked how the project’s managers will handle the money.

Calls to Delay Libra’s Launch

Libra’s white paper  states that the target is to launch in the first half of 2020. At that point, the 28 founding members of the association is expected to reach 100.

Maxine Waters, a Democratic congresswoman in the United States, has called for a delay. Waters serves as the chair of the House Financial Services Committee. She said Wednesday  that the launch should wait until after Congress has examined the project in detail.

Given the company’s troubled past, I am requesting that Facebook agree to a moratorium on any movement forward on developing a crypto-currency until Congress and regulators have the opportunity to examine these issues and take action.

During the Wednesday interview, Sandberg acknowledged the mood among regulators:

Regulators have concerns. We’re already meeting with them. We know we have a lot of work to do, but this was an announcement of what we would like to do with a roadmap for people to jump in and help us do it.

Facebook aims to maintain its leadership role in Libra throughout 2019. After the network launches it plans to step back to become a peer among equals. With ongoing concerns about Facebook’s dominance of social networking and communications, that promise might not be enough to calm regulators.