Libra, the recently announced crypto currency of Facebook, has sparked a lot of dust since June. Since the announcement, several central banks have been critical of the crypto currency and the company has been attacked in the US Senate. Why actually? Five questions about Facebook's new crypto coin.
Let's start from the beginning: what is libra?
Libra is a crypto currency that was announced by Facebook in June. The coin is introduced by a partnership of 28 companies, including Uber, Paypal and therefore Facebook.
In the first instance, Facebook primarily wants to use the currency to allow users to exchange money among themselves. The intention is that companies will also use the coin, so that you can buy a cup of coffee with it, for example. The social media company hopes to introduce the crypto currency in the first half of 2020.
Why the crypto currency, Facebook?
Facebook seems to pursue only noble goals on paper with the coin. At the announcement, the company writes that libra has been created to give more people access to financial services.
"For many people in the world, simple financial services such as saving, sending and spending money are still far away. We are going to try to floor this with the Calibra, a new digital wallet that you can use to save, send and send libra. to publish, "wrote Facebook.
If Facebook only pursues noble goals, why is there criticism?
Since the announcement of the currency, the European Central Bank (ECB), the central banks of the United States and China, but also American politicians, have been concerned about the announced libra.
Concerns concern, among other things, the lack of regulation if, in one fell swoop, the 2.4 billion users of Instagram, Facebook and Whatsapp get access to the crypto currency. There are also concerns about money laundering, consumer protection and privacy.
Finally, Facebook could gain too much financial power with the crypto currency. "If Facebook and other companies want to become a bank, they just have to apply for a banking license," US President Donald Trump tweeted critically.
.... 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 ...Avatar
Who will supervise the currency?
The Swiss financial market authority, Finma, should do that. Libra Association, the joint venture of several companies behind libra, is based in Geneva.
However, this is not yet certain. According to David Marcus, head of Calibria, talks are still ongoing between the company and Finma about the regulator.
There are currently sessions in the US Senate and the House of Representatives on the libra, why?
Well, because of concerns about the company, both the House of Representatives and the Senate wanted to talk to Facebook people. Monday was the first hearing, Marcus then joined the Senate banking committee and received much criticism from American politicians.
Democratic senator Sherrod Brown called Facebook "dangerous" at the start of the session. "Facebook says" trust us, "but every time Americans do that, it leads to problems. According to Brown, the company has shown" scandal after scandal "that Facebook doesn't deserve the trust.
It became apparent on Monday that the Democrats in the House are not fans of the libra. Tech site The Verge then reported that the Democrats are working on a bill to ban the libra and other steps taken by major tech companies in the financial market. The law states that large tech companies that have a utility function and an annual turnover of at least $ 25 billion (€ 22.2 billion) should not have links with financial institutions.
Democratic Sen. Sherrod Brown said it's “delusional” to trust Facebook with people's money during a Senate Banking Committee hearing on Facebook's Libra cryptocurrency https://t.co/Kxg9qkw779Avatar