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A24 TECHNOLOGY
Monday 14 october 2019
Facebook's Libra currency battered by defections, pushback

By BARBARYA ORTUTAY Libra also poses new ques- ___ a letter to Facebook re- are they going to do with
AP Technology Writer tions for the social network: REGULATORY CHALLENGES questing a halt on moving that information and what
Facebook faces a rough Given that cryptocurrency The financial industry is forward with the currency are they going to put in
road ahead with Libra, but is lightly regulated now, if at more heavily regulated and with the digital wal- place to safeguard that in-
defections by high-profile all, how will financial regu- than internet companies — let, called Calibra, which formation?"
partners are still unlikely to lators oversee Facebook's especially in the U.S., where would be used in the new Cryptocurrencies such as
spell the end for the digital plan? And just how much tech companies have of- currency system. House Libra store all transactions
currency. on a widely distributed,
On Friday, Visa and Master- encrypted ledger known
Card announced their de- as the blockchain. Libra
partures from the Libra proj- is designed so transac-
ect, as did e-commerce tion amounts are visible,
giant eBay and payments but transaction partici-
startup Stripe. Last week, pants can be anonymous
PayPal became the first — at least until they move
major company to drop money into real-world ac-
out of Libra. The exodus counts.
comes amid growing — not Facebook said people
to mention stronger-than- can keep their individual
anticipated — regulatory transactions from appear-
pushback against Libra in ing on the blockchain by
the U.S. and elsewhere. using Calibra's wallet app,
"It's a big setback for them though in that case, Cali-
but it's not the end," said bra itself would have peo-
Gartner analyst Avivah Lit- ple's data.
an. Calibra said it won't use fi-
Facebook CEO Mark Zuck- nancial data to target ads
erberg will appear before on Facebook. It also said it
Congress later this month to won't share financial data
talk about the company's with Facebook, though
plans for Libra. Rep. Maxine there are exceptions that
Waters, the California Dem- In this April 11, 2018 file photo, Facebook CEO Mark Zuckerberg testifies before a House Energy haven't been fully spelled
ocrat who heads the House and Commerce hearing on Capitol Hill in Washington. out, including situations
Financial Services Commit- Associated Press where data sharing would
tee where Zuckerberg will "keep people safe."
testify on Oct. 23, called more personal data will this ten been given free rein. Democrats also have ___
Libra "a new Swiss-based fi- give the social media gi- Companies creating Libra threatened legislation that IS FACEBOOK TOO BIG?
nancial system" that poten- ant, anyway? are in for a "rude awak- would block big tech com- Congress, the Federal
tially is too big to fail and Litan said Facebook can still ening" if they expect the panies from getting into Trade Commission and the
could require a taxpayer easily launch Libra in coun- same model of light regu- banking. Justice Department are all
bailout. tries with no pushback, of lation, said Karen Shaw Pe- One hurdle Facebook and looking into whether Big
Libra's supporters say it which there are plenty. She trou, managing partner of its partners will face is the Tech giants such as Face-
could open online purchas- also dismissed the idea that Federal Financial Analytics potential for criminals to book and Google have
ing to millions of people Facebook needs partner in Washington. use it for money laundering gotten too big.
who do not have access to companies such as Mas- She expects Libra will fall and fraud, given the pseu- Adding another major busi-
bank accounts and could terCard or Visa in order to under U.S. regulations ad- do-anonymous nature of ness will make Facebook
reduce the cost of send- keep Libra afloat. opted in the wake of the Libra and other digital cur- bigger — if Libra takes off
ing money across borders. "The only reason they want 2008 financial crisis. Which rencies. as intended — but it may
It's easy to see how attrac- the companies is because agency will oversee the Facebook said it will com- not raise major antitrust red
tive an alternative like Li- it looks good," she said. "It venture will depend on ply with all existing financial flags, said New York Univer-
bra could be to people in was never a democratic what the currency system regulations. sity law professor Eleanor
countries beset with hyper- blockchain. It was always does, she said. ___ Fox.
inflation, such as Venezu- run by Facebook and a In the U.S., the head of the PRIVACY PUSHBACK "It is a grass-roots entry into
ela and Zimbabwe . couple of financial compa- House Financial Services Facebook has been a new field and can actu-
But Facebook already nies that were going along Committee wants Face- dogged with questions ally reflect an increase in
faces scrutiny over its poor for the ride." book to suspend plans for about users' personal data, innovation," she said.
record on privacy and its Now, those are just not go- a new currency until Con- especially since the Cam- Sarah Miller, deputy direc-
dominance in social me- ing on the ride. gress and regulators are bridge Analytica scandal tor of Open Markets In-
dia, messaging and related "You have to remember, able to study it more close- hit last year. stitute, which advocates
businesses. this is the blockchain. This is ly. That appears to be part of against monopolies, said it
Will people trust it to create the internet. It's pretty much In July, Waters and other the reason Facebook cre- was "insanity" to trust Face-
a new, global currency? unstoppable," she added. committee Democrats sent ated a nonprofit oversight book to launch a global
association to govern Li- cryptocurrency when it is
bra. It also created a sub- already facing regulatory
sidiary, Calibra, to work on scrutiny around the world
the technology, separately over data privacy.
from its main social media "The FTC needs to rein in
business. Facebook before the cor-
Still, Facebook is "going to poration puts our financial
get access to a lot of finan- information and currency
cial data," Forrester analyst systems at risk, too," she
Aurelie L'Hostis said. "What said.q