It is not just central banks probing Facebook over its cryptocurrency (Libra) lately. The media has learned that the European Commission has asked the social media behemoth to answer a series of queries related to Libra, comprising the dangers to data privacy and financial stability along with the firm’s capability of complying with money laundering and counter-terrorist financing rules. Executives also needed to know how Libra might manage its reserves.
The interrogation is fraction of a bigger EU attempt to decide if and how Libra might be managed, considering it is even permitted to work in the area. There are noteworthy challenges to that happening. Benoît Coeuré of the European Central Bank has alerted that the rules for acceptance “will be extremely high,” and the government of France has disputed that Libra should not be permitted in the EU.
This does not mean Libra will be eliminated. Some politicians in the Europe dispute that the virtual cash can be helpful for cross-border transactions. On the other hand, regulators have been expecting for a truly EU-broad deal, since permission in one EU nation might effectively make the currency workable all over the Europe.
The timing is not practically great for the firm when Libra just lost support from PayPal. While Facebook is not expected to operate into more trouble with its associates (they are anticipated to log in a membership declaration by this week), the mixture of the departure with EU interrogating is bound to lift questions about the feasibility of the digital money format.
On a related note, a few days after the media recommended that some firms declared as initial supporters for Libra were mulling back over the support, PayPal has declared it will conclude its association in the Libra Association. Founding members spent $10 Million to support the association, and as media notes, it is unclear what takes place to that money if members pull out of the deal.