Here’s what I have read about Facebook Libra:
- According to the Financial Times, it is “a new global digital currency backed by assets and supported by more than two dozen companies ranging from Visa and Mastercard to Lyft and Spotify”. It has been planned for some time: “[the] social network quietly assembled a crypto team and courted partners for more than a year.” And “banks were notably absent from [the] list of initial backers”.
- Running the show will be a new Facebook subsidiary called Calibra and an independent consortium called Libra Association
- You won’t need a Facebook account to use Libra
- According to Dante Disparte, head of policy and communications for the Libra Association, “the central goal here really is financial inclusion”
- While Calibra is targeting only basic fund transfers to begin with, the subsidiary plans to expand its services to allow customers to pay bills and purchase goods or services
- There are enormous “Big Brother” concerns; as John Harris has it in the Guardian, “Facebook will know the people and companies with whom its users have financially interacted, and that is likely to only be the start”. And “whatever the guarantees [about data protection], the most basic point is obvious enough: why should a company with such an appalling record on personal data be trusted to so massively extend its reach?”.
And here’s what I have not read about Facebook Libra:
- What are its money laundering and terrorist financing vulnerabilities?
- Who will supervise it?
- Will it be covered by the same AML/CFT obligations as are being gradually introduced for cryptocurrencies?
- If it all goes pear-shaped, who will be accountable?
Given that one of the tenets of AML is that you should always do your money laundering research before you launch anything new, it’s something of an oversight.
(Here’s the word from the FATF, in Recommendation 15: “Countries and financial institutions should identify and assess the money laundering or terrorist financing risks that may arise in relation to (a) the development of new products and new business practices, including new delivery mechanisms, and (b) the use of new or developing technologies for both new and pre-existing products. To manage and mitigate the risks emerging from virtual assets, countries should ensure that virtual asset service providers are regulated for AML/CFT purposes, and licensed or registered and subject to effective systems for monitoring and ensuring compliance with the relevant measures called for in the FATF Recommendations.” Perhaps someone could mention it to Mr Zuckerberg or Mr Disparte.)