EU Antitrust Regulators Scrutinise Facebook’s “Cryptocurrency” Project
Facebook’s Libra project has been questioned by European Union anti-trust regulators. They are concerned about the project, popularly referred to as a cryptocurrency, restricting competition.
Libra has been subject to immense scrutiny already from global policy and law makers. In fact, the company recently admitted that the regulatory pressure might force it to postpone or even cancel the project altogether.
Facebook’s “Cryptocurrency” Ambitions Draw Yet More Regulatory Attention
Almost as soon as the social networking giant Facebook announced its plans to move into the cryptocurrency space with Libra, the idea was met with hostility from global regulators.
Policy makers from France, the EU, the US, and elsewhere cited a hefty list of concerns about the cryptocurrency-like project. Even United States President Donald Trump weighed in on the subject, stating that the company would have to apply for licences if it wanted to offer banking services, just like any other financial institution does. He also stated that Libra would never pose a challenge to the might of the US dollar:
....Similarly, Facebook Libra’s “virtual currency” will have little standing or dependability. If Facebook and other companies want to become a bank, they must seek a new Banking Charter and become subject to all Banking Regulations, just like other Banks, both National...— Donald J. Trump (@realDonaldTrump) July 12, 2019
According to a report today in Bloomberg Law, the list of regulators with doubts about the firm’s cryptocurrency ambitions continues to grow. It states that antitrust regulators in the EU are concerned that the digital currency may stifle competition. The report cites a “document seen by Bloomberg” as evidence.
The document appears to be a questionnaire that has been sent to groups associated with Libra at this early stage of its development. Such a document is a standard part of enquiries made by the European Commission.
The questionnaire seeks to measure how the Libra cryptocurrency-like system may shutout rivals. The European Commission antitrust regulators believe that the integration of the digital currency with applications such as WhatsApp and Messenger could make it all but impossible for competing systems to find traction in the market.
The ever-growing list of regulatory concerns against Libra could well jeopardise the project’s proposed 2020 launch date. In fact, in a document submitted to the US Securities and Exchange Commission, the company admitted that the scrutiny might force the California-based social media company to discard the cryptocurrency-like project altogether.
Despite the fact that Libra is being touted as a cryptocurrency, most Bitcoin proponents do not see it as competition. Libra will not be priced by market forces like Bitcoin is. Rather, it will be backed by a basket of national currencies. It therefore does not represent the same robust monetary policy that has made BTC a favourite of economists from the Austrian school of thought.
In fact, most analysts seem to agree that Libra may well facilitate a mass on boarding of users to Bitcoin and other decentralised digital assets. The theory goes that it will be much easier to get exposure to BTC by first buying Libra and exchanging it. This may well prove more attractive to people after they have familiarised themselves with Libra.
Related Reading: Bitwise Claims Facebooks Libra Propelled Bitcoin 3 Years Ahead, But is This True?
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