Facebook’s Crypto Libra Won’t Be Legalized in Russia: State Press

Libra, Facebook

Facebook's much-hyped crypto Libra won't be legal in Russia, according to a senior financial official in the government. | Source: Shutterstock

By CCN.com: TASS, a major news agency in Russia wholly owned by the federal government, has reported that Russia will not legalize Libra, merely days after its highly anticipated announcement.

An excerpt from TASS’ report read:

“Russia will not legalize the use of Libra cryptocurrency, which Facebook plans to introduce into circulation in 2020. This opinion was expressed by the chairman of the State Duma Committee on the Financial Market, Anatoly Aksakov, in an interview with the radio station Kommersant FM on Tuesday.”

With France and the U.S. currently evaluating Libra based on existing regulatory frameworks governing the crypto sector, it remains unclear whether the cryptocurrency will be able to demonstrate a successful launch it anticipates in 2020.

Major crypto regulatory hurdles ahead, can Libra overcome?

Prior to the release of the whitepaper of Libra on June 18, crypto enthusiasts generally expected Facebook and the Libra Association to develop a permissioned blockchain network and a native cryptocurrency that is centralized to a large extent to comply with local regulations in markets it tends to launch in.

However, the whitepaper of Libra explicitly indicated the intent of the consortium to create a blockchain network with a decentralized structure over the long term.

“To ensure that Libra is truly open and always operates in the best interest of its users, our ambition is for the Libra network to become permissionless. The challenge is that as of today we do not believe that there is a proven solution that can deliver the scale, stability, and security needed to support billions of people and transactions across the globe through a permissionless network,” the whitepaper read.

Although the value of the crypto is said to be maintained stable using the Libra Reserve, a reserve of real assets which will likely include reserve currencies, analysts expect that central banks may see a model in Libra that could threaten their authority over the global monetary system.

Some of the world's largest companies have participated as founding members of the Libra crypto project
Some of the world’s largest companies have participated as founding members of the Libra crypto project (source: libra.org)

Chairman of the State Duma Committee on the Financial Market, Anatoly Aksakov, stated that he personally believes Libra will be banned in Russia and many countries with strict capital controls including India are seemingly moving towards the direction of restricting Libra at least in the near term.

“‘With regard to the use of Facebook cryptocurrency as a payment instrument in Russia at this stage – my opinion is that in our country it will be banned,’ he said. Aksakov stressed that in Russia there are no plans to adopt legislation ‘which gives space for active use of cryptotools created in the framework of open platforms, blockchains,’ since this may pose a threat to the country’s financial system,” reported TASS.

Bruno Le Maire, the pro-crypto finance minister of France, which has relatively practical regulatory frameworks in place for crypto-related ventures, said that Libra cannot be left to become a sovereign currency.

“It can’t and it must not happen,” Le Maire said about Libra and in response, a Facebook spokesperson said in an interview with The Independent that the consortium will cooperate with lawmakers as it moves towards launching Libra.

It may be possible but there will be a difficult road ahead

Libra Association has debuted with many of the biggest financial institutions and technology conglomerates as founding partners of the consortium in the likes of Uber, Lyft, Mastercard, Visa, Andreessen Horowitz, and Booking Holdings, companies that have the means and resources to push forward with the planned launch of the cryptocurrency.

Still, analysts foresee a challenging phase ahead for Facebook and the rest of the Libra association given the initial response of lawmakers in major crypto markets.

Last modified: March 4, 2021 2:36 PM
Financial analyst based in Seoul, South Korea. Contributing regularly to CCN and Forbes. I have covered the stock market and bitcoin since 2013. Reach him on Twitter or LinkedIn.
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