Recently, the Australian newspaper reported that Australian regulators are going to press Facebook to reveal details about its cryptocurrency, Libra. With each day, more and more regulatory bodies are going against Libra. So, what is happening here?
What’s happening?
As per The Australian newspaper, eight Australian regulators had agreed to utilise their formal powers to press Facebook on its plans to launch Libra. This move is done by them after an unsatisfactory meeting with the social media firm in October.
Before I tell you know what Libra is, you should know about stable coins.
A stable coin is a cryptocurrency pegged to another stable asset like gold or the US dollar. Stable coins are generally traded at a fixed price unlike other cryptocurrency like bitcoin, which is highly volatile.
So, what is Libra?
Libra is also a stable coin and its value would be tied to a basket of low-risk securities and traditional, government-issued currencies, such as the dollar, euro, pound and yen. This means that Libra is not like Bitcoin but like Tether. Also, Libra is not controlled by Facebook alone but by the Libra Association and Facebook is one of the members of that association.
Why is everyone against Libra?
Despite being different from conventional crypto currencies like Bitcoin, Libra is still a digital currency. It too will operate on the blockchain, meaning that it will not be regulated by anyone. So, Australian along with other global regulators are worried that Libra could disrupt the financial system, harm users of Facebook apps and aid money laundering.
Considering Facebook’s ‘not so good’ past, you might think that the regulators are absolutely right. If Facebook can’t safeguard the data of its users, imagine the company getting hold of our financial data. So, everyone is worried that Libra has the potential to bring harm to the financial system and to its users.
How does the future look like for Libra?
Considering the recent events, not so good.
Before the Libra Association’s inaugural meeting on October 14, seven of the association’s original founding members such as Paypal, Visa, Mastercard, Stripe, Mercado Pago, eBay and Booking Holdings dropped out of it.
If you think long and hard about it, Paypal, Visa, Mastercard, Stripe and Mercado Pago have a very good reason to bail out from the project.
Why you ask? Because they are all payments companies. Imagine Libra getting caught doing something illegal, say money laundering for terrorists, then these companies would be dragged into the mess as well. If regulators impose stringent actions against these companies for those illegal activities, then it would hurt their reputation big time since these companies are in the finance business.
And this is a huge headache for those companies which are involved in the Libra project. In order to launch Libra, these companies have to convince regulators that certain measures have been deployed to prevent Libra from being used for money laundering activities. And this is not an easy thing to do.
But from David Marcus’ perspective, everything is all and good in Libra town.
David is heading the project at Facebook and he believes that he can address the concerns of politicians and regulators and continue to move forward with the project. He has also pledged that Libra wouldn’t come into use until all the issues are resolved.
Now that’s too ambitious David!
Also, in his interview to CNBC, David said that Facebook’s aim is to make it as easy to send money around the world as it is to send a photo.
But hey, isn’t that how Google Pay works as well?
Speaking of Google Pay, how far have you come with your stamp collection? Yeah, even I’m looking for a rangoli as well!
