When it comes to Facebook’s Libra digital currency not even one of the most crypto-friendly countries in the world is turning a blind eye to social media giant’s cryptocurrency plans and hoping all will work out well magically. Rather, Japan is taking proactive steps to understand Libra’s potential ramifications even before the cryptocurrency has gotten off the ground.
According to Reuters , Japan has now set up a working group charged with the responsibility of figuring out the potential impact of Libra on financial regulation, tax payments, financial transactions and monetary policy. Members of the working group have been drawn from Japan’s financial regulator Financial Services Agency, the Ministry of Finance and the Bank of Japan.
Per sources who spoke to Reuters, Japan is also interested in cooperating with other bodies such as the G7 and G20. The two bodies have also been involved in similar efforts aimed at understanding Libra’s potential policy implications. Japan’s efforts to scrutinize Libra come ahead of a meeting of G7’s financial leaders where Libra will no doubt be a topic of discussion.
While Facebook is no stranger to controversy, the opposition it has faced with regards to its plans for the Libra cryptocurrency even before it has been launched has been astounding. In its home country, Facebook has managed to unite both sides of the political divide, with the opposition to its plans coming from both Republicans and Democrats.
On Monday the Treasury Secretary Steven Mnuchin lamented that ‘money launderers and terrorist financiers’ stood to benefit from Facebook’s planned digital currency and thereby labeled it a ‘national security issue’. Last week President Donald Trump had weighed in arguing that if Facebook was interested in offering financial services such as those envisaged in the Libra white paper then it would have to ‘seek a new Banking Charter and become subject to all Banking Regulations’.
The chairman of the Federal Reserve had also last week stated that Libra had raised serious concerns as it posed a risk to the financial system. This week Facebook’s representatives will appear before both chambers of the U.S. Congress.
Initially, after Facebook announced plans for Libra, there seemed to be a growing consensus that the move was generally positive for the crypto sector as it would trigger the mass adoption of cryptocurrencies across the globe.
But now with regulators, central bankers and other policymakers keen to show Facebook who is boss, it seems the biggest achievement Libra has had so far is to attract closer scrutiny for the wider crypto sector in ways that might stifle innovation.