Facebook Was Wooing Regulators Before Controversial Libra Reveal

Journalist:
Adam Scott
September 19, 2019

Facebook sat down with the United Kingdom’s finance ministry, the central bank, and other regulatory officials in what was presumably a pre-emptive move to win favor before announcing its own self-titled cryptocurrency, Libra.

This new revelation comes from Reuters, which received the details from freedom of information requests and claims that the responses illustrate an intentional effort to garner support for Libra before its unveiling in mid-June.

The social media behemoth reportedly sat down with one of the British finance ministry’s junior ministers and officials dealing with cryptocurrency policy before meeting with the Financial Conduct Authority (FCA) on April 23 and April 24, respectively. Facebook then met with both, again, in addition to the Bank of England, on May 14.

Questions Asked About Libra

All of the meetings were apparently centered around discussions over Libra, though the specific questions posed by authorities were redacted in the documents Reuters received.

However, the questions posed by the U.S. Senate Committee on Banking, Housing, and Urban Affairs in a letter are publicly-known and are, possibly, not far removed from those posed by officials across the pond. Questions in the latter revolved around how Libra would work, what are the privacy and consumer protections being put in place, whether or not Facebook has received consumers’ financial information from a company and to what extent, whether or not Facebook sells or shares consumer information with unaffiliated third parties, etc.

The letter also explained:

“It is important to understand how large social platforms make data available that can be used in ways that have big implications for consumers’ financial lives. It is also important to understand how large social platforms use financial data to profile and target consumers.”

Did the Meetings Work in Facebook’s Favor?

The meetings apparently had minimal — though possibly some — positive effect for Facebook, as England’s central bank has come out with a skeptical position of Facebook’s cryptocurrency.

Though The Guardian reported that the Bank of England welcomed Libra as a potentially-useful addition to trading goods and services, the central bank has also claimed it should be highly regulated lest it put the country’s financial stability in a precarious position.

The Bank of England is looking at the advent of digital currencies. | Source: Shutterstock

The Bank of England also believes more information is needed in regards to the private currency.

Libra is Less Welcome in the United States and Europe

Overall, Libra has received a milder response from regulators in the U.K. compared to those in the United States, France, and Germany.

The United States took the social media behemoth to task in a Congressional hearing, in which it piled on the questions about how regulators and users can trust Facebook with consumers’ financial information and privacy. California’s Maxine Waters was one of the most vocal critics, stating before the hearing:

“Facebook has data on billions of people and has repeatedly shown a disregard for the protection and careful use of this data. With the announcement that it plans to create a cryptocurrency, Facebook is continuing its unchecked expansion and extending its reach into the lives of its users.”

France and Germany largely share this sentiment, with the former’s finance minister, Bruno Le Maire, aiming to block the development of Libra in Europe.

He recently stated:

“Libra also represents a systemic risk from the moment when you have two billion users. Any breakdown in the functioning of this currency, in the management of its reserves, could create considerable financial disruption. I want to be absolutely clear: in these conditions, we cannot authorise the development of Libra on European soil […] The monetary sovereignty of countries is at stake from a possible privatisation of money … by a sole actor with more than 2 billion users on the planet.”

Germany backed up its European counterpart in a joint statement, which noted:

“No private entity can claim monetary power, which is inherent to the sovereignty of nations.”

With responses from France and Germany being overwhelmingly negative, it seems that Facebook might have had some interest in sitting down with European regulators — in addition to those in the U.K.

This article was edited by Samburaj Das.

Adam Scott

Adam lives in Upstate New York and has worked extensively in both fintech and entertainment media. You can email him at adamccn[at]protonmail.com.