Facebook announced in June this year its plans to launch a cryptocurrency dubbed Libra. However, the company has seen a prominent backlash of media and regulatory attention ever since, grilling the project across a variety of essential parameters. With this in mind, let’s explore at least five reasons for which Libra may not launch – something that has been seen as entirely positive within the cryptocurrency community.
It didn’t take long before Facebook’s future cryptocurrency project grabbed the regulatory attention. Unfortunately, a lot of it was rather negative.
The French Finance Minister and a German member of the European Parliament were among the first to react, calling for a discussion over Libra. Moreover, both countries agreed to block the project, outlining that “no private entity can claim monetary power, which is inherent to the sovereignty of nations.”
Months later, the situation around Libra seems to get even worse and it brings attention to the whole cryptocurrency market. G20 members were urged to articulate their stance, as Facebook’s project couldn’t respond to all regulatory challenges.
Losing Key Supporters
When initially announced, Libra had a total of 28 members behind it. Powerhouses such as MasterCard, Visa, Spotify, Uber, and more were among the backers of the project. Unfortunately for Facebook, the negative stance on behalf of regulators across the globe cast a shadow of doubt over the project’s future and it lost important backers.
PayPal was the first major name to back out and the course was set. Visa, MasterCard, and eBay followed shortly after. The payment processing company Stripe stepped back as well and the Latin American payment system Mercado Pago was next.
Needless to say, losing key supporters brings a lot of pressure on the project and even though Libra officials have said that they will continue working as planned, confidence in it is getting notably weaker.
Scams, Frauds, Legal Issues
Being a social media giant, Facebook’s cryptocurrency brainchild brought notable attention to itself in other aspects as well. Even though the official announcement specifically pointed out that Libra will be launched no sooner than 2020, that didn’t stop scammers. Calibra.com is the official website of Facebook’s project, however, Libra coins were offered to be sold to the public on another one.
On another note, legal issues came from an Israeli insurance company with the same name – Libra. They sent a notice to the social media giant, claiming that they own all rights associated with the “Libra” trademark. Facebook responded by saying that they own and refer to a different trademark – Libra Association, which is a non-profit organization based in Switzerland and owned by them.
Yet, it remains interesting to see how the case will turn out as it’s pretty obvious that the name of the cryptocurrency was intended to be Libra, not Libra Association.
Facebook’s Previous History
One of the most important issues brought from regulatory watchdogs regarding Libra’s mission was users’ safety and private data. And it’s safe to say that Facebook has a rich history of scandals and it was even fined with $5 billion following the privacy war with Washington.
The CEO, Mark Zuckerberg, testified before Congress when the company after the notorious Cambridge Analytica data leaks and even admitted that the “right” regulatory might be needed. The European Union took a stand as well, by creating the General Data Protection Regulation (GDPR).
It’s worth noting that Zuckerberg will be testifying before the House of Representatives over Libra today.
Structural Issues With The Cryptocurrency Itself
To top all of the above, Libra has some inherent structural issues within its concepts, in general.
Samson Mow, CEO at Blockstream, pointed out that “Libra can’t be everything for everyone, and it can’t be both open and closed at the same time.”
His comments followed a statement from the Head of Libra, David Marcus, who said:
“We open-sourced it and as a result, it doesn’t belong to us anymore, It is now belonging to the community and they will help build the code and we will relinquish control over both the codebase and network through the process.”
This is in a direct contradiction with another statement of Marcus, which said that “wallets will enforce the sanctions that are led by our national security apparatus and treasury.”
Furthermore, Marcus previously said that people can do whatever they want with the money, as long as they have “legitimate use of the product.” Naturally, this means that the Libra Association could, in theory, decide that a certain use isn’t legitimate and freeze users’ funds or de-platform them entirely.
In other words, besides the regulatory that Facebook is facing, it appears that the general concept of Libra needs a lot of work and polishing.
And if all of the above isn’t enough, Facebook itself warned its investors that Libra may never launch.