Facebook’s Libra has the potential to make digital currencies mainstream
But only if it can get past the global herd of regulators first. And judging by recent events, that’s not going well. The Swiss regulator Federal Data Protection and Information Commissioner (as the Libra governance consortium is based in Switzerland) stated that it has yet to receive a response from Libra regarding its intentions, despite Facebook saying to the United States Senate that it expects the FDPIC to be Libra’s main regulatory agency.
The Swiss regulator FDIC stated that it has yet to hear a response from Libra regarding its intentions
Is Facebook trying to dodge regulations again?
We don’t know that for sure, but it’s not like this would be the first time the company has run afoul of regulators. Facebook was just charged a $5 billion fine for breaching privacy laws, and, while $5 billion is nothing to scoff at, it’s far from the first time that Facebook has ended up under a regulator's microscope. In fact, it’s not uncommon to think that the $5 billion didn’t go far enough.
What sort of privacy concerns are there about Libra?
Many of the same as there are about Facebook. But now, not only will Facebook have access to all the social media data they’ve collected - they’ll also be able to see where each and every Libra is sold, bought, transferred, or sent, by whom, when, and where. This will give Facebook unprecedented access to information that not even governments can collect - a perfect record of every single transaction, tied to an entirely non-anonymous Facebook account. These concerns have led the US government to schedule even more Libra hearings in the coming weeks.
This will give Facebook unprecedented access to information that not even governments can collect
Is Facebook really the only company that gets this data?
Not exactly. Technically, the Libra Association is comprised of multiple companies, including the big payment processors like Visa and Mastercard, as well as venture capital firms, telecom companies like Vodafone, and even taxi companies like Uber. However, the actual privacy structure of Libra is unclear, and it isn’t apparent how data access will be shared or provisioned amongst the Libra Association members.
What We Think
Facebook’s stock is still up 7% since the Libra whitepaper dropped on June 18th, showing that despite the regulatory hurdles, investors are still bullish on Facebook’s new currency. On the other hand, this week’s gains have almost been eliminated by a sharp 4.5% after news broke about the $5 billion fine on Thursday. In addition to the fine, Facebook must now set up an independent privacy board, and Facebook’s co-founder, Chris Hughes, is lobbying to break the social media giant up.
This much negative press may put downward pressure on the stock for a while, and it may be that Libra’s success or failure will determine Facebook’s future going forward.
New to trading? Are you an expert that wants to try a new platform? Try Monfex: THE ULTIMATE CRYPTOCURRENCY TRADING PLATFORM!
Did you like this article? CHECK OUT OUR BLOG for more articles like this!