Facebook’s intention to enter the cryptocurrency market appears headed for a number of political roadblocks. “Libra” is Facebook’s intended challenger to Bitcoin and other digital currencies. The arrival of Libra seemed surprising. Little news about the social media company’s intention to enter the cryptocurrency market leaked. When Facebook made an official announcement, critics were quick to express skepticism. U.S. politicians on both sides of the aisle aren’t thrilled with the idea of Facebook entering the cryptocurrency realm. Concerns exist about Facebook launching currency free of regulatory oversight.
Lack of regulation brings forth many risks to persons who trade in cryptocurrency. Even someone wishing to use cryptocurrency for purchasing takes a risk. Unlike bank accounts, cryptocurrency wallets aren’t federally insured. If Facebook suffers financial troubles, individuals invested heavily in Libra could suffer losses.
Libra also presents a potential threat to the dollar and other world currencies. Threats to currency have a potentially destabilizing economic effect.
Facebook’s executives may feel shocked at the response to Libra plans. The controversy comes on the heels of other troubles the company is experiencing. Facebook recently suffered a fine of $5 billion for its previous privacy violation scandal. The $5 billion fine creates some controversy and resentment. The company’s valuation is well over $500 billion. The penalty represents such a minute figure, segments of the press dubbed it a prototypical “slap on the wrist.” While Facebook walks away from the fine with little monetary damage, bad publicity may linger for some time. The negative publicity could affect the Libra project.
Executives at Facebook appear to understand avoiding regulatory oversight will be nearly impossible. The company is now taking steps to work with Congress to develop an agreeable regulatory plan. Ultimately, Facebook won’t have any say in the matter. Lawmakers can do what they wish whether Facebook agrees or not.