Facebook’s motto has been to move fast and break things. That battle cry is about to be tested as regulators across the world are being urged to act even faster and prevent the tech firm from developing its Libra cryptocurrency in a ‘regulatory void’.
According to Benoit Coeure, a member of the European Central Bank’s Executive Board, it is ‘just too dangerous’ for tech giants such as Facebook to issue cryptocurrencies without having proper financial regulations in place, Bloomberg reports:
It’s out of the question to allow them to develop in a regulatory void for their financial service activities, because it’s just too dangerous. We have to move more quickly than we’ve been able to do up until now.
The ECB executive board member also stated that digital currencies will serve a ‘wake-up call’ for regulators. Consequently, this might result in regulatory bodies making improvements in their operations.
While Bitcoin and other cryptocurrencies have been around for years now, Facebook’s plan to launch a digital currency has particularly triggered central bankers, policy makers and regulatory bodies across the world.
In Facebook’s home turf, a U.S. congressional committee last week asked the tech giant to halt the development of its Libra cryptocurrency. Specifically, the House Financial Services Committee cited issues touching on among others national security and monetary policy that needed addressing. The congressional committee also cited Facebook’s troubled past with regards to data privacy as a reason for the urgency. The social media giant’s dominance did not help matters either:
Because Facebook is already in the hands of over a quarter of the world’s population, it is imperative that Facebook and its partners immediately cease implementation plans until regulators and Congress have an opportunity to examine these issues and take action.
The House Financial Services Committee also further warned that if Facebook were to go ahead and launch Libra prior to legislative solutions being found, the result will be a ‘new Swiss-based financial system that is too big to fail’. The Congressional committee has said it will consequently hold public hearings on crypto-related matters. A full Committee hearing specifically touching on Libra will be held next week.
Across the pond from Facebook’s home turf, Bank of England Governor Mark Carney has also indicated that Libra will be subjected to the highest regulatory standards.
Down under, the Reserve Bank of Australia Governor Philip Lowe has also indicated a ‘lot of regulatory issues’ will need to be worked out before Libra can be widely accepted. In Asia, the Bank of Japan has also cautioned that Facebook’s digital currency will pose a huge risk to the current financial systems.
Facebook may have over two billion users on its main app but as it is finding out after signaling intent to disrupt the traditionally conservative global financial system with Libra, very few friends in high places.