What Are Some Problems Being Faced By Facebook-backed Cyptocurrency Libra?

In a first, PayPal, one of the supporters of Libra, has backed out from the alliance
What Are Some Problems Being Faced By Facebook-backed Cyptocurrency Libra?
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When Facebook first announced plans to launch an alternative currency, the social networking giant perhaps never envisioned the problems that it would potentially become marred in.

Already in the middle of controversies around privacy and how it collects and uses data from its millions of users, Facebook has faced backlash from multiple fronts on Libra, a cryptocurrency it initially planned to launch in 2020. In a first, PayPal, one of the supporters of Libra, backed out from the alliance on Friday, in what is being touted as a major setback for the Menlo Park, California-based company.

This development comes three days after the Wall Street Journal reported, citing sources, that payment services providers Visa, Mastercard and other partners of the project may reconsider their involvement in the cryptocurrency. 

Regulatory Scrutiny

France and Germany have criticized the cryptocurrency, citing risks to the financial sector, putting in jeopardy Libra’s authorisation in Europe. Digital currencies pose risks to consumers, financial stability and even “monetary sovereignty” of European states, finance ministers of both countries had said last month.

The European Central Bank has also said it is planning to launch a public virtual currency that could essentially make projects like Libra redundant.

Apple’s Tim Cook Against Private Group Creating Currency

In an interview with French newspaper Les Echos on Friday, Apple’s chief executive officer Tim Cook said he wasn’t “comfortable” with the idea of a private group creating a competing currency. Cook, who said he believed that money must remain in control of states, added that a private company did not have to seek to gain power in such a manner.

The comments come at a time when the debate around privacy has gained momentum across the globe, in the wake of fears that personal data of people is used by companies to influence the masses.

Problems With Launch In India

In June, The Economic Times reported, citing sources, Libra will not be launched in India as current regulations in the country don’t allow the use of banking networks for blockchain-based currency transactions.

A panel of the Indian government recommended the banning of all private cryptocurrencies in July, and a jail term of up to 10 years and heavy fines for those dealing in virtual currencies.

The same panel had also put forward a suggestion to consider the launch of an official government-backed digital currency through the Reserve Bank of India.

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