Facebook’s blockchain stock won’t be public until next year but the company experiences backlashes early on. A french-led coalition was formed in an aim to block the entry of the crypto project Libra in the Eurozone.
Together with Germany, Italy, Spain, and the Netherlands, France is pushing for a ban against Facebook’s upcoming crypto exchange. The move resulted in the fear that Libra might outpower established fiat currencies in the Eurozone. In a backroom meeting, the coalition has urged the rest of the European Union (EU) to consider banning Libra altogether.
In a statement, the coalition said that cryptocurrency’s anonymous nature of transactions makes it hard to trace fraudulent transactions. A French official said that allowing cryptocurrencies to operate with the same monetary powers as any other sovereign nation would compromise the monetary policies of other countries.
As a resolution, the coalition has concluded that no stablecoins should operate unless the financial risks that these entities pose have been fully addressed.
What is Facebook Libra?
Facebook unveiled its plans for a blockchain stock, called Libra, in June. The social media giant describes it as a simple global currency and financial infrastructure that would empower people.
Opposed to traditional blockchain, Facebook claims that Libra is not decentralized and will be governed by a Swiss group called the Libra Association that currently includes 28 member companies. Early backers of the project include Visa, MasterCard, PayPal, Lyft and Uber.
Facebook plans to launch Libra by 2020, but immediate warnings from some experts have surfaced before the event. Most of them are raising worries about the security of the virtual coin.
Libra’s Decreasing Value
Facebook is not a stranger when it comes to facing security issues. It seems that the Cambridge Analytica scandal and Fake News issues have set a precedent for the Libra project.
In the stateside, the US House of Representatives Financial Services Committee in June has ordered Facebook to put on hold the development of the Libra project temporarily. The halt order will take effect until further examination and discussion of the security issues.
The EU has also been long concerned about the potential “anti-competitive behavior” of Libra Association. Bloomberg reported that EU authorities are concerned that the proposed payment system tends to unfairly shut out rivals.
These unsettled issues have taken a toll on Facebook’s planned blockchain stock, with some of its major backers already withdrawing from the project. eBay, MasterCard, Visa, PayPal, and Stripe have announced that they are leaving the group. Most of them did not specify why they are backing out but said that they are still monitoring the project.
FB Blockchain Stock EU Ban
Banning Libra in Europe sounds problematic for the EU. In an article at Politico, EU officials said that the commission needs to establish a legal reason to declare a standoff against Facebook’s crypto project. As for the moment, the EU said, they still need more information to know what rules would apply to Libra.
Instead, EU diplomats are preparing a resolution that will prevent Facebook Libra from operating in the Eurozone unless the EU can regulate it.
The European Union also urges caution against France’s campaign to block Libra in the region. It said that the campaign could create a hostile image for the EU in the eyes of tech companies.