Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

Facebook's Libra currency battered by defections, pushback

Facebook's Libra currency battered by defections, pushback

Facebook faces a rough road ahead with Libra, but defections by high-profile partners are still unlikely to spell the end for the digital currency. On Friday, Visa and MasterCard announced their departures from the Libra project, as did e-commerce giant eBay and payments startup Stripe. Last week, PayPal became the first major company to drop out of Libra. The exodus comes amid growing not to mention stronger-than-anticipated regulatory pushback against Libra in the U.S. and elsewhere.

"It's a big setback for them but it's not the end," said Gartner analyst Avivah Litan.

Facebook CEO Mark Zuckerberg will appear before Congress later this month to talk about the company's plans for Libra. Rep. Maxine Waters, the California Democrat who heads the House Financial Services Committee where Zuckerberg will testify on Oct. 23, called Libra "a new Swiss-based financial system" that potentially is too big to fail and could require a taxpayer bailout.

Libra's supporters say it could open online purchasing to millions of people who do not have access to bank accounts and could reduce the cost of sending money across borders. It's easy to see how attractive an alternative like Libra could be to people in countries beset with hyperinflation, such as Venezuela and Zimbabwe .

But Facebook already faces scrutiny over its poor record on privacy and its dominance in social media, messaging and related businesses. Will people trust it to create a new, global currency? Libra also poses new questions for the social network: Given that cryptocurrency is lightly regulated now, if at all, how will financial regulators oversee Facebook's plan? And just how much more personal data will this give the social media giant, anyway?

Litan said Facebook can still easily launch Libra in countries with no pushback, of which there are plenty. She also dismissed the idea that Facebook needs partner companies such as MasterCard or Visa in order to keep Libra afloat.

"The only reason they want the companies is because it looks good," she said. "It was never a democratic blockchain. It was always run by Facebook and a couple of financial companies that were going along for the ride."

Now, those are just not going on the ride.

"You have to remember, this is the blockchain. This is the internet. It's pretty much unstoppable," she added.


REGULATORY CHALLENGES

The financial industry is more heavily regulated than internet companies - especially in the U.S., where tech companies have often been given free rein. Companies creating Libra are in for a "rude awakening" if they expect the same model of light regulation, said Karen Shaw Petrou, managing partner of Federal Financial Analytics in Washington.

She expects Libra will fall under U.S. regulations adopted in the wake of the 2008 financial crisis. Which agency will oversee the venture will depend on what the currency system does, she said.

In the U.S., the head of the House Financial Services Committee wants Facebook to suspend plans for a new currency until Congress and regulators are able to study it more closely.

In July, Waters and other committee Democrats sent a letter to Facebook requesting a halt on moving forward with the currency and with the digital wallet, called Calibra, which would be used in the new currency system. House Democrats also have threatened legislation that would block big tech companies from getting into banking.

One hurdle Facebook and its partners will face is the potential for criminals to use it for money laundering and fraud, given the pseudo-anonymous nature of Libra and other digital currencies.

Facebook said it will comply with all existing financial regulations.


PRIVACY PUSHBACK

Facebook has been dogged with questions about users' personal data, especially since the Cambridge Analytica scandal hit last year.

That appears to be part of the reason Facebook created a nonprofit oversight association to govern Libra. It also created a subsidiary, Calibra, to work on the technology, separately from its main social media business.

Still, Facebook is "going to get access to a lot of financial data," Forrester analyst Aurelie L'Hostis said. "What are they going to do with that information and what are they going to put in place to safeguard that information?"

Cryptocurrencies such as Libra store all transactions on a widely distributed, encrypted ledger known as the blockchain. Libra is designed so transaction amounts are visible, but transaction participants can be anonymous - at least until they move money into real-world accounts.

Facebook said people can keep their individual transactions from appearing on the blockchain by using Calibra's wallet app, though in that case, Calibra itself would have people's data.

Calibra said it won't use financial data to target ads on Facebook. It also said it won't share financial data with Facebook, though there are exceptions that haven't been fully spelled out, including situations where data sharing would "keep people safe."


IS FACEBOOK TOO BIG?

Congress, the Federal Trade Commission and the Justice Department are all looking into whether Big Tech giants such as Facebook and Google have gotten too big.

Adding another major business will make Facebook bigger - if Libra takes off as intended - but it may not raise major antitrust red flags, said New York University law professor Eleanor Fox.

"It is a grass-roots entry into a new field and can actually reflect an increase in innovation," she said.

Sarah Miller, deputy director of Open Markets Institute, which advocates against monopolies, said it was "insanity" to trust Facebook to launch a global cryptocurrency when it is already facing regulatory scrutiny around the world over data privacy.

"The FTC needs to rein in Facebook before the corporation puts our financial information and currency systems at risk, too," she said.
AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
IMF Upgrades Global Growth Forecast as Weaker Dollar Supports Outlook
House Republicans Move to Defund OECD Over Global Tax Dispute
France Opens Criminal Investigation into X Over Algorithm Manipulation Allegations
Trump Steamrolls EU in Landmark Trade Win: US–EU Trade Deal Imposes 15% Tariff on European Imports
ChatGPT CEO Sam Altman says people share personal info with ChatGPT but don’t know chats can be used as court evidence in legal cases.
Intel Reports Revenue Beats but Sees 81% Rise in Losses
Politics is a good business: Barack Obama’s Reported Net Worth Growth, 1990–2025
UN's Top Court Declares Environmental Protection a Legal Obligation Under International Law
"Crazy Thing": OpenAI's Sam Altman Warns Of AI Voice Fraud Crisis In Banking
The Podcaster Who Accidentally Revealed He Earns Over $10 Million a Year
UK Government Considers Dropping Demand for Apple Encryption Backdoor
Japanese Man Discovers Family Connection Through DNA Testing After Decades of Separation
Russia Signals Openness to Ukraine Peace Talks Amid Escalating Drone Warfare
Switzerland Implements Ban on Mammography Screening
Pogacar Extends Dominance with Stage Fifteen Triumph at Tour de France
President Trump Diagnosed with Chronic Venous Insufficiency After Leg Swelling
CEO Resigns Amid Controversy Over Relationship with HR Executive
NVIDIA Achieves $4 Trillion Valuation Amid AI Demand
Tulsi Gabbard Unveils Evidence Alleging Political Manipulation of Intelligence During Trump Administration
Centrist Criticism of von der Leyen Resurfaces as she Survives EU Confidence Vote
Trump Announces Coca-Cola to Shift to Cane Sugar in U.S. Production
FIFA Pressured to Rethink World Cup Calendar Due to Climate Change
Zelensky Reshuffles Cabinet to Win Support at Home and in Washington
"Can You Hit Moscow?" Trump Asked Zelensky To Make Putin "Feel The Pain"
Church of England Removes 1991 Sexuality Guidelines from Clergy Selection
Superman Franchise Achieves Success with Latest Release
Hungary's Viktor Orban Rejects Agreements on Illegal Migration
Air India Pilot’s Mental Health Records Under Scrutiny
Jamie Dimon Warns Europe Is Losing Global Competitiveness and Flags Market Complacency
Moonshot AI Unveils Kimi K2: A New Open-Source AI Model
Martha Wells Says Humanity Still Far from True Artificial Intelligence
Nvidia Becomes World’s First Four‑Trillion‑Dollar Company Amid AI Boom
EU Delays Retaliatory Tariffs Amid New U.S. Threats on Imports
Trump Proposes Supplying Arms to Ukraine Through NATO Allies
US Opens First Rare Earth Mine in Over 70 Years in Wyoming
Bitcoin Reaches New Milestone of $116,000
Severe Heatwave Claims 2,300 Lives Across Europe
Declining Beer Consumption Signals Cultural Shift in Germany
Emails Leaked: How Passenger Luggage Became a Side Income for Airport Workers
Polish MEP: “Dear Leftists - China is laughing at you, Russia is laughing, India is laughing”
Western Europe Records Hottest June on Record
BRICS Expands Membership with Indonesia and Ten New Partner Countries
Elon Musk Founds a Party Following a Poll on X: "You Wanted It – You Got It!"
China’s Central Bank Consults European Peers on Low-Rate Strategies
France Requests Airlines to Cut Flights at Paris Airports Amid Planned Air Traffic Controller Strike
Poland Implements Border Checks Amid Growing Migration Tensions
Emirates Airline Expands Market Share with New $20 Million Campaign
Amazon Reaches Milestone with Deployment of One Millionth Robot
Yulia Putintseva Calls for Spectator Ejection at Wimbledon Over Safety Concerns
House Oversight Committee Subpoenas Former Jill Biden Aide Amid Investigation into Alleged Concealment of President Biden's Cognitive Health
×