Facebook’s planned launch of its own cryptocurrency, the Libra coin, has shone a light on the cryptocurrency industry in general. The social media giant wants to launch its own cryptocurrency, enabling users to make global instant payments with no need for a bank account. It now looks unlikely that Facebook will meet the planned launch date of June 2020, as it struggles to overcome hurdles in gaining regulatory approval.
While governments and financial bodies all wade into the argument around whether or not Facebook is capable of running its own cryptocurrency, the rest of the market is receiving more attention than it has ever had in the last decade since Bitcoin was launched. This represents a breakthrough. It means those who hold the power are now taking cryptocurrency seriously, realizing it has great potential, and considering how it might be used and regulated in the future.
Facebook users who adopt Libra Coin could potentially adopt other cryptocurrencies, as they may trade Libra coin for other forms of cryptocurrency, boosting the entire market.
The Blockchain Association had already been working hard with policymakers to help them understand how cryptocurrency works, what its future potential could be, and the myriad uses for blockchain technology. Now Facebook’s plans to launch a Libra coin to its 2.41bn active users has made those in charge sit up and take more notice, as they consider the power this could potentially give Facebook as a provider of a global online payment system that bypasses traditional banking.
Facebook’s Libra coin proposal has brought into sharp focus the urgent need for better laws and regulations around the use of cryptocurrency, giving investors more protection and ensuring cryptocurrency providers greater clarity around how they should operate. Some countries, including Switzerland, have clear regulations regarding how cryptocurrency providers can operate, but this is not the norm in other countries. Now it seems they will need to follow suit quickly.
One difficulty to overcome is the lack of ownership of some cryptocurrencies, including Bitcoin. Who is to be held accountable is unclear. Cryptocurrency companies are also concerned the authorities won’t understand their individual nuances and will therefore try to take a one-size-fits-all approach, which could cause problems.
Some Government officials have even gone so far as to say Libra coin poses a threat to the entire financial system. While this may sound dramatic, the scale of Facebook users across the globe means that even if only a fraction of them start to use Libra coin, Facebook could quickly adopt a dominant position as a large global financial institution. US Treasury Secretary Steven Mnuchin has also said he feels Libra coin has the potential for misuse by terrorist financing and money launderers. Other cryptocurrencies are already known to be used across the dark web in criminal activity, as transactions are non-traceable and anonymous.
It will be interesting to see how Facebook negotiates the resistance to its plans to launch Libra coin, but whether it succeeds or not, the proposal has certainly opened up an interesting debate that could help accelerate a proper regulatory framework that legitimizes the use of cryptocurrency and blockchain technology. It seems Libra coin has helped cryptocurrency to reach a pivotal moment. What happens next will be fascinating.