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Jul 9, 2019

To be or not to be? Is Facebook’s Libra coin singing “I Will Survive”?

Join me, Aviva Ounap and Jonathan Dunsmoor, Founder and Principal at Dunsmoor Law, as we have a chat about Facebook’s Libra and whether or not it will get the green light from a host of regulators.

As you may know, members of the United States Congress House Financial Services Committee have called on Facebook to suspend its Libra cryptocurrency project. The reasons for this centered on the perceived “national security” threats of the Libra project being run from Geneva.

Committee chairwoman Maxine Waters is one of five senior committee members demanding a “moratorium on any movement forward on Libraexternal link” as US lawmakers prepare for a hearing on July 17.

Facebook set up the Libra Association in Geneva in May and released details of how the digital payments system would work. It plans to issue a Libra cryptocurrency as a stablecoin, backed by a basket of central bank-issued currencies to allow users to make payments as easily as sending text messages.

The move has caused concern in many countries, including the US, where it has come under the scrutiny of Congress.

“It appears that these products may lend themselves to an entirely new global financial system that is based out of Switzerland and intended to rival U.S. monetary policy and the dollar. This raises serious privacy, trading, national security, and monetary policy concerns for not only Facebook’s over 2 billion users, but also for investors, consumers, and the broader global economy,” reads the committee letter, which was sent to Facebook bosses on Tuesday.

“Failure to cease implementation before we can [examine the implications in a committee hearing], risks a new Swiss-based financial system that is too big to fail.” The expression “too big to fail” is usually applied to large banks that would disrupt national economies if they collapse.

The letter indicates that a big concern for the committee is that the cryptocurrency would be controlled outside of the US. Facebook plans to launch Libra in 2020, at which point the Swiss-based Libra Association plans to take control of the stockpile of central bank money that would control the value of the cryptocurrency.

The association plans to have 100 members by then, who would also be responsible for approving transactions carried out with Libra. This body currently comprises of 28 “Founding Members”. These entities range from Visa, eBay, Spotify, and Uber, who each pay $10 million dollars for the privilege of being in this exclusive association, privy to the data accessed by this centralized project.

So, what will the future hold? Have a listen as we explore the future of this digital currency.

Please listen to Episode 60 for an introduction to Facebook’s Libra Coin.

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