It is now official that Facebook will launch a cryptocurrency after the company released the white paper explaining Libra and its testnet two days ago. The public launch is expected to take place in the first half of 2020, but until then the project could face significant problems.
For the past few months, speculations of Facebook launching a cryptocurrency had gradually increased and now that the project had been officially confirmed by the tech giant, regulatory concerns had started to linger.
US officials not happy with the project
The plan to create a global cryptocurrency will face scrutiny from the US Senate Banking Committee on July 16th, according to a recent Reuters article, and David Marcus, the person in charge of overseeing the project is one important figure expected to testify.
On the other hand, the Democratic-controlled House of Representatives does not fancy with Facebook’s project either. Maxine Waters, the Chair of the House Financial Services Committee had already announced on June 18th she plans to call Facebook to testify.
As the latest news show, Facebook won’t fully control Libra, but it will get one vote in the governance of the Libra Association. Companies like Visa, Uber, and Andreessen Horowitz are among the most prominent figures, but regulators are concerned that the social media currently holding more than $2 billion users could become a platform for moving money across the globe under the radar of financial authorities.
Several actions for the Securities and Exchange Commission had been seen for the past year, but given the size of Facebook, the regulatory scrutiny could reach new heights. The company is also not in its best period, given the latest mishandling of user data and accusations of not doing enough to prevent Russian interference in the 2016 presidential election.
Will the Facebook Libra get approval?
Although Facebook’s Libra project aims to power transactions between established consumers and businesses globally, and also to offer access to financial services for the unbanked, the company could be forced into making several structural reforms, before gaining permission to move ahead with its project.
The company held the project behind closed doors until a few days ago, given that there’s still a lot of work to be done. With the latest regulatory scrutiny, their work could become more difficult, as they will need to convince financial authorities about the reliability of the Libra network. A project of such dimensions could have a disruptive effect on the financial world, an aspect acknowledged by the Fed’s chairman Jerome Powell during his last press conference.
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