France has made it clear that it will block the development of Facebook’s new cryptocurrency, Libra, in Europe, dealing the crypto a major blow.
The country’s finance minister, Bruno Le Maire, said issues concerning consumer risk and governments’ monetary sovereignty must be addressed first before plans for Libra can progress.
During his speech at a conference in Paris on virtual money on Thursday, the minister said:
“I want to be absolutely clear: in these conditions, we cannot authorise the development of Libra on European soil.”
Facebook revealed plans for Libra in June, triggering immediate warnings from a number of experts that it could move control over the economy from governments and their central banks to large business.
Libra’s introduction additionally raised concern regarding the risks such a currency could pose to people, particularly following the Cambridge Analytica scandal, which drew attention to Facebook’s management consumers’ information.
Facebook’s role in the spread of fake news and extremist videos has also come under scrutiny. Investors in other cryptocurrencies such as bitcoin, have suffered huge losses by gambling on their value or have had their digital wallets raided by hackers.
Libra is created to be supported by a host of currency assets to avoid the unpredictable swings experienced by bitcoin and other crypto. It is expected to be officially launched in the first half of next year.
In contrast to other cryptocurrencies, which aren’t controlled by a central authority, Libra will not be decentralised, but will be entrusted to a Swiss-based association of major tech and financial services firms.
Apart from Facebook, supporters of Libra include the payment companies MasterCard, Visa and PayPal, and the ride-hailing apps Uber and Lyft.
In a forthright attack on the risks posed by a digital currency controlled by big organizations, Le Maire said:
“The monetary sovereignty of countries is at stake from a possible privatisation of money by a sole actor with more than 2 billion users on the planet.”
A major regulators’ concerns around the globe is the potential that Libra could help consumers abandon national currencies in times of crisis, complicating government efforts to regulate the economy.
The governor of the Bank of England, Mark Carney, gave Libra a cool welcome in June, saying Threadneedle Street would approach the digital currency with “an open mind but not an open door”.
Carney said the cryptocurrency would have to meet the highest standards of prudential regulation and consumer protection, as well as address concerns such as money laundering and information protection.
Facebook has marketed Libra as a chance to offer affordable digital commerce and financial services to over a billion “unbanked” persons – adults without bank accounts or people who use services outside the banking system, for example, payday loans.
Libra plus the Calibra online wallet that would accompany it, vows to grant Faceboook opportunities eventually to establish financial services into its offerings and to allow many small businesses to purchase ads on the social network.
Financial officials and experts have raised issues, however, as to how the digital currency would be regulated, particularly how it would comply with regulations created to combat money laundering and terrorism funding.
Dante Disparte, the head of policy and communications at the Libra Association, the no-profit organization developing the digital currency, said the French minister’s comments underscored the significance of the project’s supporters collaborating with regulators around the world.
He claimed the association wanted to work with regulators to achieve a “safe, transparent and consumer-focused implementation of the Libra project”.
Speaking about the technology that underpins digital currency, Disparte said:
“We recognise that blockchain is an emerging technology, and that policymakers must carefully consider how its applications fit into their financial system policies.”