Blockstream chief strategy officer Samson Mow pulled no punches with Facebook’s much-hyped crypto, Libra.
Finished watching the entirety of the Senate Banking Committee hearings today.@Libra_ is so screwed.
— Samson Mow (@Excellion) July 17, 2019
He is not the first industry insider to criticize the planned crypto launch, both industry experts and lawmakers are voicing concerns over the security of the open-source currency, and the potential censorship issues that come from the way it is being led.
Regulatory concerns with Libra
Cryptocurrencies have been attractive to users because of their permissionless nature, and the ability for those who use the currencies to avoid censorship put in place by governments and other agencies. Libra’s website states that its digital currency will “gradually transition to a permissionless state” implying that at the outset this will not be the case.
Mow was not the first industry expert to voice concerns, in an interview with Bloomberg on July 11 Ethereum’s co-founder Mihai Alisie said he is extremely concerned about the impact Facebook’s stablecoin would have on the wider crypto industry.
“This has implications on so many areas, from the economic to the political to the technological to surveillance and data privacy […] It [Facebook] is actively manipulating the behavior of people on a global scale.”
Now, the hearing is providing a platform for members of Congress to voice their concerns about the regulation of cryptocurrency on a larger scale, beyond simply targeting Libra. Prominent crypto commentator Nathaniel Whittemore has praised the fact that the scrutiny Libra is facing from the government is putting regulatory concerns in the spotlight. Paraphrasing a comment made by Tom Emmer he tweeted “cryptocurrency is incredibly important, and Facebook is going to f*** it up for everyone.”
“I’m glad that after 10 years, Congress has decided to pay attention to the technology that could, like the internet, upend society”
— Nathaniel Whittemore (@nlw) July 17, 2019
The industry, on the whole, appears to be taking the view that whilst Libra’s model is flawed, the fact that it is bringing cryptocurrencies into the spotlight is no bad thing. The lack of regulation in the sector is attractive on the one hand, but equally, there needs to be a certain level of financial framework and protection set in place to ensure that currencies based on the blockchain do not become watered down and censored like fiat money is today.
Less freedom than traditional banking
The US government is also looking at Libra with caution, members of Congress this week voiced concerns over how much of people’s lives Facebook would be controlling if using Libra as a currency became commonplace. One of the researchers involved in Chainspace, a startup that was acquired by Facebook to research and develop Libra, tweeted “Libra could end up creating a financial system that is *less* censorship-resistant than our current traditional financial system.”
Rep. Alexandria Ocasio-Cortez ramped up scrutiny into the Libra Association, stating:
“[Libra is] a currency controlled by a non-democratically-elected board of largely massive corporations.”
In reference to the lack of democratically elected members of the association that instead is made up of large corporations including Visa, Paypal, eBay, and others. Meanwhile, Rep. Sean Duffy asked Libra’s David Marcus if people banned from Facebook would be able to use Libra, a question that Marcus did not have an answer to. Critics are saying this is further evidence that Libra will not be impartial.
Rep. Duffy starts upbeat. “This is absolutely brilliant and innovative.”
And then, TWIST: pulls out the knife on censorship and cash vs. Libra. “Can Milo Yiannopoulos or Louis Farakhan use this system?”
“If I’m a gun dealer . . . can they use your system?”#libraindc
— David Z. Morris (@davidzmorris) July 17, 2019
If Facebook’s stable coin is going to stand a chance of taking off in Western markets, the company is going to have to address these concerns and reassess its take on transaction censorship.
The company has already been the subject of criticism for monopolizing markets and taking advantage of users’ data. It would appear that regulators and users could be drawing the line with Facebook’s involvement in their daily lives when it comes to controlling a new financial system.