Financial inclusion and privacy are increasingly appearing to be mutually exclusive features of our modern world. On June 18, Facebook announced plans for its new cryptocurrency, Libra, with the purported goal of bringing the world’s “unbanked” billions into the digital economy. For a company already mired in privacy-related controversy, it was an interesting move; for those across the world without access to basic financial services, the initiative could be a compromise they’re willing to make.
At its core, Libra provides users with access to digital token, with financial institutions holding the currencies and government bonds that underpin its value. After its launch in 2020, Libra would become a viable competitor to costly financial services companies, allowing billions of people access to the rest of the world — via Facebook.
Though Facebook’s initiative fits Zuckerberg’s world-saving rhetoric, U.S. lawmakers have been quick to criticize the social media giant for its continued expansion into people’s lives, despite an ongoing antitrust probe by the House Judiciary Committee and widespread privacy concerns. Chair of the House Financial Services Committee, Maxine Waters, has called for a moratorium on Libra’s development and has requested that Facebook executives testify before the committee on issues of privacy, national security, and trading risks. Facebook, she warned, is “continuing its unchecked expansion and extending its reach into the lives of its users.”
Representative Patrick McHenry, also on the committee, has echoed Waters’ concerns. “We need to go beyond the rumors and speculations and provide a forum to assess this project and its potential unprecedented impact on the global financial system,” he wrote.
Perhaps the most significant concerns to lawmakers and privacy pundits alike is the fact that Libra isn’t being developed in a vacuum. Facebook’s gargantuan reach, with 2.7 billion users across its various platforms, means Libra has worldwide implications. U.S. legislators may try to wrangle control of Libra at home, but the digital currency will know no boundaries once it’s launched next year.
European regulators are approaching Libra with similar skepticism. In France, finance minister Bruno Le Maire has called on G7 countries, made up of France, Germany, Italy, Japan, the U.S., the UK and Canada, to draft a report on the cryptocurrency ahead of a planned summit next month.
“This money will allow [Facebook] to assemble even more data, which only increases our determination to regulate the Internet giants,” LeMaire warned.
In a bid to ease privacy concerns in an already fraught year, Facebook said its digital wallet service Calibra will be regulated by the U.S. government and has pledged not to use Libra data for targeted advertising. The firm’s commitment to user privacy, however, has come under serious scrutiny in recent years, and whether Zuckerberg has the trust of the public remains to be seen.
“While Calibra has pledged customers’ account information will not be used to target advertising, Facebook’s record on this front gives cause for doubt,” wrote the Financial Times.
Indeed, the discussion of the hour may be one of next-generation banking, but the real challenge for Facebook is a public relations one.