Facebook's cryptocurrency ambitions face privacy concerns, political backlash
June 19, 2019 12:33 PM NPT
SAN FRANCISCO/NEW YORK, June 19: Facebook Inc announced ambitious plans on Tuesday to launch a new global cryptocurrency called Libra, part of an effort to expand into digital payments that immediately raised privacy concerns.
The social networking giant has linked with 28 partners including Mastercard, PayPal and Uber to form Libra Association, a Geneva-based entity governing the new digital coin, according to marketing materials and interviews with executives. No banks are yet part of the group.
To facilitate transactions, Facebook also created Calibra, a subsidiary that will offer digital wallets to save, send and spend Libras. Calibra will be connected to Facebook messaging platforms Messenger and WhatsApp.
The whole system is scheduled to launch in the first half of 2020.
Facebook executives and others associated with Libra have big aspirations. They hope it will not only power transactions between established consumers and businesses globally, but offer unbanked consumers access to financial services for the first time.
Facebook is also betting Libra can squeeze more revenue out of its suite of apps, something already happening on Chinese social networks like WeChat.
Representative Maxine Waters, chairwoman of the U.S. House Financial Services Committee, called for Facebook executives to testify before Congress and asked the company to halt development of Libra until lawmakers and regulators have reviewed the project.
“With the announcement that it plans to create a cryptocurrency, Facebook is continuing its unchecked expansion and extending its reach into the lives of its users,” Waters said in a statement.
Other regulators, lawmakers and government officials around the globe also quickly issued critical statements. France’s finance minister said he had asked central bank heads from G7 countries to write a report on the project by mid-July.
A Facebook representative said the company looked forward to answering lawmakers’ questions.
Before Tuesday’s announcement, Facebook was already facing significant backlash over mishandling user data and not doing enough to prevent Russian interference in the 2016 U.S. presidential election. Those issues have led some government officials to call for Facebook to incur penalties, or be forcibly broken up.
Kevin Weil, who runs product for the Libra initiative, said Facebook hopes it can bring global regulators to the table by publicizing its plan.
“It gives us a basis to go and have productive conversations with regulators around the world,” he told Reuters. “We’re eager to do that.”
The name “Libra” comes from Roman weight measurements, the astrological sign for justice and the French word for freedom, said David Marcus, who heads the project for Facebook.
“Freedom, justice and money, which is exactly what we’re trying to do here,” Marcus said in an interview.