- Facebook announced the launch of its new cryptocurrency, Libra, on Tuesday. But the critics already have their doubts.
- France's finance minister was among the first to voice his misgivings over Libra, saying it must not be allowed to become a "sovereign currency."He has asked the governors of the G7 central banks to prepare a report on Libra for mid-July.
- Politicians in Germany and Italy also voiced concern, with one saying Facebook could become a "shadow bank."
- European Data Protection Supervisor Giovanni Buttarelli told Business Insider that he had concerns over Facebook's push into cryptocurrency, flagging "any further concentration of personal data" as posing "additional risks to the rights and freedoms of individuals."
- "The proposed launch of a digital coin (cryptocurrency) by Facebook will require careful scrutiny from several enforcement bodies, including data protection authorities," he said.
- Visit Business Insider's homepage for more stories.
Within hours of Facebook announcing its new cryptocurrency Libra, lawmakers in Europe were raising the alarm.
France's finance minister Bruno le Maire told radio station Europe 1 on Tuesday that he had no problem with Facebook building a payment system, but the idea of Libra becoming a "sovereign currency" is "out of the question."
Facebook has presented Libra as an online currency, but Facebook's VP of blockchain product Kevin Weil told Business Insider that it could evolve and move into more sophisticated financial products like credit.
Le Maire added that he would need reassurances that such a payment system couldn't be used for nefarious purposes, for example, to finance terrorism.
His misgivings are strong enough that he has asked the governors of the G7 central banks to produce a report for mid-July laying out the risks posed by the new currency.
Le Maire also said that the new cryptocurrency could allow Facebook to hoover up even more data about users than it already does. Facebook has said that the financial data generated by Calibra — the subsidiary it has set up to manage Libra — will not be shared with Facebook or used to target ads at users.
Meanwhile, German member of the European Parliament Markus Ferber said the new currency could turn Facebook into a "shadow bank" which should, "set off alarm bells for regulators." Italian politician Francesco Boccia similarly voiced concern, tweeting that Libra would join the existing cryptocurrencies "without regulation."
While Facebook has presented Libra as well shored up, with 27 companies including Mastercard, Uber, and Andreessen Horowitz ranking among the "founding members," regulatory scrutiny still has the potential to sour things for Facebook.
Mastercard's executive vice president for digital solutions Jorn Lambert told Reuters that if the project experiences too much regulatory pushback "we might not launch."
In an exclusive interview with Business Insider Germany, European Data Protection Supervisor Giovanni Buttarelli also raised concerns about Facebook's push into cryptocurrency.
"We recognize the potential of new technologies, including, as in the case in question, new applications, which aim to provide financial and ecommerce services in new or efficient ways," he told Business Insider on Tuesday. "However, any further concentration of personal data poses additional risks to the rights and freedoms of individuals — so the proposed launch of a digital coin (cryptocurrency) by Facebook will require careful scrutiny from several enforcement bodies, including data protection authorities.
"It would be deeply concerning, for example, for a company with access to massive volumes of personal information, gathered through its social media platforms and communications services, to be able to combine this information with the tracking of online digital purchases," he continued.
"The history of the last 15-20 years indicates that only where there is genuine competition will service providers compete on data protection standards," Buttarelli said. "One of our big challenges, therefore, is actually to determine how we can de-concentrate markets and give a boost to start-ups and others seeking to promote privacy by design solutions, so that individuals and business clients have more choice in trusted service providers or commercial partners than just a handful of companies with problematic business models."