Finding Flaws: Where is the backlash against Facebook’s Libra emanating from?

  • 29 June 2019, Saturday, 10:30

Facebook’s aim of building the next payment focused vision for the technology world began on a high. With the likes of MasterCard, Visa, PayPal, and Uber backing Project Libra, the consortium looked set to tether together the finance-technology-crypto realms, but then, as all movie scripts go, a villain stepped forth.

Days after unveiling Libra, several regulatory authorities, not just from the United States, but from the likes of France, the EU, Australia, and India fronted several obstacles for the social media giant’s crypto-project with some even suggesting Libra might crash before it even takes off.

Anthony Pompliano, co-founder and partner at Morgan Creek Digital and all-around Bitcoin bull, added to the above sentiment in a recent interview with Ran Neuner of CNBC’s Crypto Trader, stating that the regulatory risk for the Facebook Libra project will be the more pressing matter rather than any internal obstacles; however, this ‘regulatory risk,’ is more nuanced than one thinks.

With all the infrastructure in place for the 2020 launch of the Libra, the question about ‘execution’ still remains. In Pompliano’s opinion, the concern should be on the question of regulatory’s obstacles rather than an internal execution.

“I’m not worried about Facebook’s ability to execute, I think that there is a very high confidence that I and others have in their ability to execute. The big question is will regulators or governments allow them to execute.”

Regulators will create a front to the Libra project citing the risks associated with the cryptocurrency industry. Francois Villeroy de Galhau, the French Central Bank chief stated that Libra must obey the anti-money laundering regulations and if banking services are on the cards, appropriate licenses from the authorities should be procured.

The Managing Director of the Monetary Authority of Singapore [MAS], Ravi Menon, following talks with Facebook earlier this week, stated that he is still unsure of how Libra would function and is seeking more information on the matter in order to curate regulation for the same.

Perhaps the most important regulatory clash for Libra will be at home with two back-to-back meetings set with the U.S. Senate Banking Committee, and the U.S. House Financial Services Committee in July. The latter comes after several members of Congress called for an outright halt fo the Facebook cryptocurrency project days after its unveiling.

Given the division of concerns between the banking elite and the political elite, Pompliano suggests that the “pushback,” will come not from financial regulators, but from “lawmakers.” Administrative obstacles have already manifested whereas central banking authorities’ questions pertain to information gathering rather than an outright halt to operations.

The Morgan Creek executive called this congressional backlash as a “fear from the unknown,” and a “blind spot,” rather than an informed decision on the Facebook Libra project,

“It’s a rational reaction, but it’s just an uninformed reaction, so, therefore, over time, Congress folks are going to get more educated, and I think we’ll find a happy medium.”