Recently, Facebook announced an ambitious cryptocurrency project called Libra, part of its efforts to expand into digital payment. However, with data scandals scandal, infringement of user information in the past, Facebook's new project immediately raised concerns about user privacy.
Facebook claims to have affiliated with 28 partners, including Mastercard, PayPal and Uber, to set up the Libra Association, an entity based in Geneva with the task of managing new cryptocurrency. No bank is a member of the Association.
To facilitate transactions, Facebook also created Calibra, a subsidiary that provides digital wallets to store, send and spend Libra encryption money. Calibra will be connected to Messenger and WhatsApp messaging platform.
The whole system is expected to officially go into operation in the first half of 2020.
Facebook directors and Libra-related units all expressed great aspirations. They hope that this cryptographic currency not only allows users to trade with businesses around the world but also provides the first financial services for those who do not have the opportunity to reach banks.
Facebook also wants Libra to help them earn more revenue from their apps, just like Tencent did with WeChat in China.
But the Libra cryptography deployment process will not go as smoothly as Facebook intended
Representative Maxine Waters, chairman of the US House of Financial Services Commission, said that Facebook directors must hear about Libra before the US Congress. In addition, Mr. Waters asked Facebook to halt development of Libra until lawmakers and regulatory authorities scrutinized the project.
"With plans to create a cryptocurrency, Facebook is continuing to expand and expand its reach without being controlled by users' lives."Mr. Waters said.
Regulatory and regulatory agencies, as well as government officials from other countries around the globe, are also quick to make important statements regarding Libra. The French Finance Minister has announced that he has asked the G7 central bank director to submit a report on Facebook's Libra project in mid-July.
A representative of Facebook shared that the world's largest social network is eager to answer the questions of lawmakers.
Before announcing Libra's pre-coding project, Facebook was faced with a strong wave of responses from both government agencies and users. Facebook is accused of unauthorized use of user data, there is no strong enough measure to prevent Russian intervention in the 2016 US presidential election … Those scandals make some key officials Government called for punishment Facebook or forced the company to break down its business.
Kevin Weil, product manager of the Libra project, shared that by publishing everything related to Libra, Facebook hopes to get approval from regulatory agencies around the globe.
"This is a base to develop and have useful dialogues with managers around the world.", Weil said. "We really want to do that."
The name Libra comes from the Roman calculation of mass, the astrology that represents justice and the meaning of freedom in French, said David Marcus, head of the Libra project at Facebook.
"Freedom, justice and money, that's exactly what we're trying to do with this project.", Marcus said.
After the Libra project was announced, Faceook shares rose 0.1% at the end of Tuesday's trading session (June 18).
The field has not been controlled
Facebook is taking advantage of one of the least controlled areas to enter the financial services market.
Bitcoin, the most famous cryptocurrency, was created in 2008 as an alternative to traditional currencies that are now controlled by governments and central banks. Therefore, some countries have found a way to regulate the market, but in general, pre-encrypted transactions have not been closely monitored.
In addition to investors losing hundreds of millions of dollars due to strong cryptocurrency and hacking transactions, the market also faces allegations of money laundering and terrorist financing. .
But with its position and ability to reach billions of people, Facebook can legitimize the transaction of cryptocurrency, a market that has so far been unrecognized and full of unpredictable fluctuations.
Other members of the Libra Association include companies like Visa, Spotify, eBay and Vodafone as well as venture capital firms like Andereesen Horowitz.
They hope that when Libra is deployed, the Association will have 100 members. Each person will have one vote if they need to decide important issues and each company participating in the association will have to invest at least 10 million USD.
The Libra Association also hopes to mobilize money as independent in the coming months. Facebook has no plans to play its leadership role after 2019.
Although the initial membership group did not have any major banks, but there were discussions among the parties, Jorn Lambert, executive vice president in charge of Mastercard's digital solutions, shared.
Big boys in the financial industry are waiting to see how regulators and users react to Libra before deciding whether or not to participate, Lambert added.
Some supporters of the Libra project acknowledged that concerns about user privacy or financial policies may make Libra unable to achieve the lofty goals set forth. However, they also had countermeasures.
For example, Calibra plans to check legal status and criminal records for customers who want to register for Libra. They will use verification procedures and anti-fraud commonly used by banks.
This subsidiary will only share customer data with Facebook or external partners if there is consent or in some other necessary cases, Facebook claims. The necessary cases may be to support law enforcement, ensure public safety or maintain system functionality in general.
Sri Shivananda, PayPal's chief technology officer, said the Libra project is still in its infancy and there is still a lot of work to be done to get approval from the authorities as well as being accepted by users.
And Mastercard's Lambert shared that he would not deploy if Libra received too many negative reactions.
According to Reuters