Facebook’s cryptocurrency initiative being subjected to criticism from lawmakers, despite being backed by industry giants, depicts the prevailing lack of trust between the social media giant and the government, owing to its “disregard for user privacy” as US Senator Maxine Waters put it.
The same was noted by Circle Research in a recently published report. It said,
“Libra’s ambitious mission to become a leading payments service and financial infrastructure provider backed by a small group of highly influential companies poses potential threats to data privacy rights, central bank authority and fiat currencies.”
The report further suggested that some countries’ central banks may view the digital asset as a rival to their issued fiat. If the project comes to fruition and becomes “pervasive”, the concern that remains in a scenario where the fiat or monetary policy is unstable is extensive adoption of Libra as the base currency. A subsequent retaliation from Central banks would “complicate legal matters” for the social networking platform, cited Circle Research.
The data associated with Libra is meant to be pseudonymous. However, the official whitepaper stated that it may share data with Facebook “in limited circumstances,” which immediately contradicts its stance on user privacy. According to the research report,
“The general lack of trust in Facebook and rising concerns regarding customer data privacy could hinder Libra and Calibra adoption.”
Despite fiat currency being associated with long-run stability, it will continue to see a gradual decline in spending power, Circle research said. Referring to Libra’s reliance on the traditional currency, the research paper said,
“.. the digital currency [Libra] will likely not be exempt from long-term devaluation if it maintains this reserve composition.”