The news of Facebook’s interest in cryptocurrency became public knowledge a few months back. It has generated tons of reactions from the global community.
This article focuses on the impact of the social media’s digital currency on the cryptocurrency industry, politics, and finance. Let’s see how much impact Libra can have on these areas of life.
Impact on the Cryptocurrency Industry
For some months, the cryptocurrency industry was quiet. Investors carry on their operations without undue attention from the government and other third parties. However, this has changed with the announcement of the digital currency from Facebook. Powerful government officials and politicians have turned their attention to the crypto industry, calling for its regulation.
The regulation may have a significant impact on the industry. There is a growing concern since lawmakers are not keen on digital currency. However, the current attention drawn to the crypto industry may earn cryptocurrency harsh regulations from these lawmakers.
One of the lawmakers recently made her concerns known. CNN Business quoted her:
I have serious concerns with Facebook’s plans. If Facebook’s plans come to fruition, the company and its partners will wield immense economic power that could destabilize currencies and governments
This statement accredited to Maxine Waters, Chairwoman, House Financial Services Committee. That gives a clue into what the industry may experience from US lawmakers.
However, going by the responses from all quarters, the cryptocurrency industry won’t remain the same once Libra makes its entry.
Libra’s Effects on Finance
There is also a growing concern that the digital currency may take over the financial industry. Several media reported that Libra was created to offer a payment platform for users of Facebook. It is created for its other platforms too such as Messenger, WhatsApp, and Instagram. According to the news, this service will be available to some 2.7 billion active monthly users.
According to Coinetelegraph, The project seeks to target the unbanked population. That accounts for around 1.7 billion adults across the globe, with a focus on cross-border remittance. The latter aspect puts Libra alongside the likes of Visa and Mastercard.
This is another feature of the digital currency that is generating negative remarks and condemnation from many people too. However, leaders across the globe are feeling concerned about the possibility of the coin taking over the financial market as people see it as a viable alternative to fiat currency.
Leaders are concerned about cryptocurrency’s lack of regulation, Libra inclusive
John Todaro, the director of research at TradeBlock gave a clue into people’s concern about the Libra currency. He told Cointelegraph:
The primary attention Libra is getting is because of the size of Facebook, its resources, and its ability to integrate a low cost, efficient digital currency payment channel across a number of its own platforms which could bring significant adoption to the digital currency space. Other projects have not seen the same level of interest, mainly because they do not have an ability to accelerate adoption of a stablecoin so quickly, which Facebook could accomplish
The currency may be used to facilitate money laundering!
CNN Business made a reference to this negative use. In one of the articles, it said:
Lawmakers are concerned in part that Facebook’s massive and global reach could make Libra a gateway for many new people into the larger crypto sector. That could potentially have negative effects on traditional financial systems.
The absence of regulation in the cryptocurrency industry is the major reason why people are so much concerned about this negative use of the coin.
US President Donald Trump also throws his weight behind those calling for the regulation of digital currency. He condemned digital currencies in strong words. Moreover, he considers them as tools for illegal activities:
I am not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air. Unregulated Crypto Assets can facilitate unlawful behavior, including drug trade and other illegal activity.
Libra’s Effect on Politics
Politicians across the globe are making contributions to the debate. Most of them are concerned about the possible impact of the digital currency on finance; something that may have a huge impact on global politics.
With the specific mention of Libra, Donald J. Trump expressed his lack of interest in the digital currency, quoting its unregulated status as a factor against it. Hear him:
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.
President Trump is not the only political leader uncomfortable with digital currency
Bruno Le Maire, France’s Finance Minister also kicked against the idea of Libra. On the announcement of Facebook’s cryptocurrency ambition, he considers the idea of Libra becoming a ‘sovereign currency’ “out of the question”. He believes the idea shouldn’t see the light of the day.
Another member of the European Parliament, Markus Ferber warned of Facebook’s potential of becoming a “shadow bank” with its cryptocurrency ambition. According to CNBC, the parliamentarian said that the social media’s interest in cryptocurrency is “a good reason for regulators to start working on a proper regulatory framework governing the rules of virtual currencies”.
Multinational corporations with giant user bases such as Facebook must not be allowed to operate in a regulatory nirvana when introducing virtual currencies
Facebook Libra is set for release in 2020
A group of companies is controlling the digital currency from the world’s number one social media platform. They are Uber, Visa, and dozens of others.
Facebook has equally developed Calibra, a digital wallet. The wallet is for the Libra users for storing and exchanging the token.
Libra will have a huge impact on the political and financial sectors. This is aside from the potential effect it will have on the cryptocurrency industry. There, it will be a major contributor.