In May of 2018, reports of Facebook moving internal staff to a new project developing a new cryptocurrency first came to light. However, work on the Facebook Coin which we know is called Libra had begun a year ago. The cryptocurrency is set to launch in 2020 but there’s not been a lot of noise surrounding its development and upcoming launch. Well, positive noise, anyway. Facebook Libra has found itself under the scrutiny of lawmakers and governments pretty much right from the start.
Since the coin is pretty close to the projected launch, we thought it would be a good idea to recap what has happened and what we know about the coin so far – from a legal perspective.
US Senate Banking Committee Hearing
The US Senate Committee On Banking, Housing, And Urban Affairs held a hearing in July 2019 entitled “Examining Facebook’s Proposed Digital Currency and Data Privacy Considerations.” with David A. Marcus, former President at PayPal and current head at Calibra. The Senate hearing was undoubtedly a result of the seemingly endless barrage of scams and scandals at Facebook threatening user privacy in the past couple of years.
In fact, lawmakers specifically stated that Facebook could not be trusted with a cryptocurrency, calling their plan “delusional” and
“crazy”. If I had to sum up the hearing in one sentence, it would be this –
“We’d be crazy to give them a chance to let them experiment with people’s bank accounts.”
-Democratic senator Sherrod Brown
UK Parliamentary Committee
Various politicians and lawmakers including Damian Collins, chair of the House of Commons’ Digital, Culture, Media and Sport Committee and Elizabeth Denham, who runs the Information Commissioner’s Office from the UK have expressed concern over Facebook Libra. Similar to US lawmakers, these concerns almost exclusively stem from Facebook’s past privacy blunders and its countermeasures (or lack thereof).
If Facebook lost personnel identifiable information of millions, what’s stopping it from losing billions in digital assets? Lawmaker’s problem with Libra is not just Facebook’s poor record, it’s the lack of vigilance and more importantly, a lack of consumer protection if things go wrong. If Facebook does end up in another scam, no government would be able to help millions of people who would lose their money – and in the end, the government would be partly responsible for allowing Libra to launch in the first place.
Since UK lawmakers are adamant on getting more information about Libra and regulate it to some extent, there may be a government probe to investigate possibilities of frauds and scams.
US Federal Reserve Chimes in Concerns of Its Own
“While the project’s sponsors hold out the possibility of public benefits, including improved financial access for consumers, Libra raises many serious concerns regarding privacy, money laundering, consumer protection, and financial stability,” says Federal Reserve Chairman Jerome Powell according to The Wall Street Journal.
This was before the US Senate Banking Committee Hearing in which David Marcus was present as the witness. It seems like the committee, and especially Powel didn’t get the answers they were looking for as US privacy chief has signed a joint statement asking Facebook to directly address a list of questions.
Why Is Everyone After Facebook Libra?
The US and UK governments aren’t alone in having voiced their concerns over Libra. In August 2019, U.K. Information Commissioner’s Office released a joint statement with privacy and data chiefs from Australia, Albania, Burkina Faso, Canada, the EU, the U.K., the U.S. all sharing similar opinions about Libra.
“We are joining together to express our shared concerns about the privacy risks posed by the Libra digital currency and infrastructure…, To date, while Facebook and Calibra have made broad public statements about privacy, they have failed to specifically address the information handling practices that will be in place to secure and protect personal information.”
- Joint statement on global privacy expectations of the Libra network
With an active user base of over 360 million people, Facebook is sort of a nation in of itself and by creating a globally accepted currency that no one but Facebook itself will have control over, that “nation” status might be further solidified – except Facebook is not a nation, it’s not even a company is decent cybersecurity. It’s pretty clear that a foreign-government used fake IDs on Facebook to manipulate the 2016 US Presidential Election, who’s to say a scandal of this level won’t happen again, but this time will affect millions globally, not just in the US.