Consumer protection groups have published an open letter addressed to Libra association members, pleading them to withdraw their support from Facebook’s controversial Libra cryptocurrency project. The Libra association members include companies like Visa, Mastercard, Uber, and Paypal, with each of them investing $10 million for the privilege of being a validator node on the network.
Calls for Withdrawal Growing Louder?
The letter to the Libra association was signed by four consumer-centric groups, including Open Markets Institute, Public Citizen, Demand Progress Education Fund, and Revolving Door Project. Labeling Libra a “parallel currency”, the letter suggested that the project would have significant financial and social implications. While they acknowledged Libra’s goal of connecting 1.7 billion people with banking and other services, the groups said that the project also has unclear aims and leadership structure based on fear.
The letter referred to the Senate hearing of Facebook’s proposed cryptocurrency, where the project received bipartisan criticism. During the hearing, senators spoke about how the cryptocurrency could be used for money laundering and terror financing, among other illegal activities. The letter also criticized Facebook for speaking on behalf of all members and representing itself as the singular voice of the Libra Association.
They went on to encourage members of the association to withdraw support and not fear the “climate of market dominance” that Facebook has created. The consumer protection groups also demanded that the era of digital money be based on fair rules and democratic deliberation.
Facebook Faces Severe Distrust Over Libra
Libra has received nearly universal criticism from all fronts, with growing calls for it to be regulated. David Marcus, head of Libra, clarified on a roadmap for regulating Libra, which appears to be very similar to that of Bitcoin. According to Facebook’s approach, law enforcement agencies will have the chance to track criminals once the tokens reach exchanges or the Calibra wallet developed by Facebook.
Marcus said that with local regulations and proper control, the system would be better for global law enforcement agencies. Furthermore, with privileged information from exchanges and software that can analyze public blockchain records, illegal acts can be easily tracked and caught. Unlike Bitcoin which can have potentially unlimited nodes, copies of Libra’s blockchain will be hosted by association members such as Uber, Lyft, and Spotify.
Senator Kyrsten Sinema asked Marcus how the Libra Project would handle a hypothetical situation involving an American using a Spanish wallet defrauded by a Pakistani developer through a Thai exchange. Marcus replied that American users will be more likely to use an American wallet and said that consumers will be offered education in this regard.
Despite a general air of distrust, many senators expressed desire to encourage innovation, even if it came from Facebook, fearing that someone else would take up the initiative sooner or later. Even the G7 summit held a brief discussion about Libra, where Japan pushed for a global cryptocurrency network as well. Japan became the first country in the world to recognize Bitcoin as a legal payment method approximately two years ago. The country also hosted a presentation on how it finalized cryptocurrency-related regulation during the G20 summit.
Do you believe that Libra’s founding members will bow down in light of increasing global regulatory pressure? Let us know your thoughts in the comments below.