The struggles of Facebook’s proposed new cryptocurrency Libra look set to continue after a number of countries expressed fresh concern about the project.
The political posturing from Russia and France seems quite aggressive after several high-profile organisations pulled the plug on their involvement with Libra.
The project was left in the lurch after PayPal headed for the door at the start of October, followed swiftly by Libra Association members Mastercard, Visa, eBay, and Stripe.
EU countries harden their stance on Libra
Last month, finance ministers in France declared that they will “block Facebook’s Libra project” as it poses a threat to monetary sovereignty.
Portugal’s finance minister Mourinho Félix also underlined his country’s aversion to the project in a recent interview, saying: “Portugal shares the concern of other European countries regarding Facebook’s cryptocurrency.”
Moreover, an influential British parliamentary committee wants to “probe” Facebook’s controversial Libra cryptocurrency project amid fears that the social media giant’s move into the financial sector will grant it too much power.
In particular, the UK parliament is concerned about Facebook’s ability to safeguard the personal financial details of billions of users after a string of controversial privacy scandals.
Ministers in Germany have also expressed concerns over how Libra may develop within the EU, given it would take power away from monetary and fiscal policies.
Russia to block Facebook?
As reported by Coin Rivet last week, Russia may also ban Facebook and Telegram if the US decides to block the launch of Libra.
According to President Vladimir Putin’s special representative for IT, Dmitry Peskov, if Libra launches without sufficient control measures, “the likelihood of Facebook being blocked” will increase in Russia.
Facebook is the biggest social media site in Russia with around 53.5 million monthly users – around 50% of which are believed to be cryptocurrency users. Cryptocurrency is most popular among tech-savvy young adults, which also happens to be the primary user base for Facebook in Russia.
Russian authorities are worried that the Libra project may have a huge impact on the payments industry, as it could provide new financial services that will immediately be globally available to all network users and replace Russian services and financial institutions.
The good news for the Russian government though is that cryptocurrency can reduce dependence on the dollar and help economies such as Russia avoid US sanctions.
However, the issue is that if every Facebook user in Russia uses Libra as their main means of payment, the traditional banking system may collapse.
Zuckerberg hearings not helping
Facebook chief Mark Zuckerberg was grilled by US Congress last week about the company’s proposed crypto coin.
Right before the hearings took place, Zuckerberg said Libra will “strengthen the fight” against financial crimes.
The Facebook CEO said: “We… believe Libra presents an opportunity to strengthen the fight against financial crimes like money laundering and terrorism financing.”
However, the hearing did not go that well. Congress lamented the inflated risk Libra would pose to money laundering and criminality, and Congressman Brad Sherman said that Libra is “a tool for tax evaders and drug dealers” and “the US dollar is an excellent currency that serves all needs”.
Congresswoman Alexandria Ocasio-Cortez also sent Facebook CEO Mark Zuckerberg stumbling with a series of challenging questions. The 30-year-old New Yorker criticised Zuckerberg for failing to deal with political misinformation that was spread on Facebook during the 2016 election campaign.
Only time will tell whether Facebook will recover from the current opposition to Libra.
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.