The call for caution comes from House Democrats and it not only covers Facebook’s cryptocurrency it also extends to the planned digital wallet Calibra, according to The Verge.
The aim of Libra is to construct a platform for developers to create services for consumers to send money around the world easily and for free. Facebook itself plans to create a revenue stream from taking a small cut when a transaction is made.
READ MORE: Facebook ready to launch its first cryptocurrency
The leading call to slow down the Libra process comes from House Financial Services Committee Chairwoman Maxine Waters, who has urged the social media firm to halt development of the token until Congress and regulators have had the opportunity to examine it.
The committee will hold a hearing on the social media giant Facebook’s proposed virtual currency Libra on July 17, 2019. The hearing will focus on the extent that Libra could destabilize financial markets and under-cut financial services providers. Moreover, at certain times, especially during periods of economic downturn, central banks could be left relatively powerless to influence the economy, and high street banks facing big shortfalls, if people seek a rapid conversion of their money into Libra.
There are other concerns with the Libra concept, such as data privacy. While Facebook aims to be more transparent, it also benefits from gathering data. According to Ray Walsh from ProPrivacy.com, who spoke with Digital Journal: “Facebook has promised not to use data amassed from the Libra blockchain to improve ad targeting without the consumer’s consent. This is troubling because if Facebook’s previous services are anything to go by, it seems likely that consent will be linked to Libra from the get-go — giving Facebook users little option but to agree should they want to take advantage of the ease of use provided by integrated Libra payments across its platforms.”
Other concerns extend to the undemocratic nature of the proposed currency. Libra does not have the ambition of bitcoin to be “a universal decentralized digital currency for people”, according to economist Michael Roberts. He notes that Libra will “be a private currency designed to extend Facebook’s control over the purchasing power of its 4bn users and make money.” While Facebook earns, users who hold Libra will not get any interest as they would if they held dollar deposits in a bank.
These various strands are set to be discussed at the House meeting. For those interested in alternative forms of payments, this will be interesting to watch with an air of caution. As Roberts noted: “If we really want from a digital currency is transparency in its operations and privacy with your data, then Facebook’s Libra is the mirror opposite of that.”
