Libra, the new cryptocurrency by social media giant Facebook, has generated controversy with lawmakers and regulators globally since its announcement in June of this year. Concerns were mostly revolved around the stablecoin potentially disrupting the global financial system. The scrutiny towards Facebook aims at the fear that the new digital currency could possibly take power away from the governments.
Around the globe
Data protection chiefs from around the world have come together to express concerns regarding Libra’s privacy risks. Issued as a joint statement published on Aug. 5 by the United Kingdom Information Commissioner’s Office (ICO), data privacy commissioners from Australia, Albania, Burkina Faso, Canada, the EU, the UK, and the US declared their concerns regarding the information handling practices ensuring security and to protect personal information.
Here’s what the Asia Pacific regulators think of Libra.
After the announcement regarding Libra in June this year, discussions have been sparked among Chinese financial regulators. Steering away from the attention on Libra, China announced that the country’s state-owned bank, the People’s Bank of China (PBoC), would be launching its own central bank digital currency (CBDC).
Yang Dong, the director at the Research Center of Finance Technology and Cybersecurity at Renmin University, mentioned that further testing is needed before launching the Chinese CBDC after gaining inspiration from Libra.
In the past, China has not been a friendly jurisdiction with cryptocurrencies like Bitcoin, perceiving them as a threat to financial stability in the country.
Mu Changchun, the lead at Digital Currency Research Institute, claimed that the CBDC would be able to process more than 300,000 transactions per second. He added, “even Libra can’t do this.”
Singapore’s regulatory take on Libra will depend on the details of the launch of the cryptocurrency offered by Facebook. The Singaporean government says it is “open” to new innovations in the sector of these do not threaten the stability of the local ecosystem.
Tharman Shanmugaratnam, the Senior Minister of the Monetary Authority of Singapore (MAS), said that the central bank is in talks with Facebook about its plans with Libra. He clarified that “appropriate regulatory responses” would be made once the details of the cryptocurrency were provided.
Haruhiko Kuroda, Governor of Bank of Japan, stated that international cooperation was essential in regulating stablecoins similar to Facebook’s Libra. He told business leaders in Osaka, “if Libra is introduced, it could have a huge impact on society.” Kuroda reiterated that policymakers should ensure that they have the highest level of regulation for stablecoins.
The Japanese authorities set up a liaison conference in July of this year, with Bank of Japan, the Ministry of Finance, and the Financial Services Agency to investigate the potential impacts of Libra on the monetary policy and financial stability.
The Australian Privacy Commissioner warned Facebook to reflect on its past mistakes and asked for an explanation of how the firm would be able to protect people’s financial information when the cryptocurrency is launched.
Last year, a major political scandal revealed that Facebook was sharing personal data of millions of people’s profiles without their consent, with a now-defunct political consulting firm, Cambridge Analytica.
Angelene Falk, Australian Information Commissioner and Privacy Commissioner, stated that there was a “significant risk” with Facebook’s involvement in Libra, as the social media giant has access to an extensive supply of personal information. A significant concern has been highlighted with regards to transaction histories being passed back to Facebook.
Falk added that the public has to be certain consent will be fully informed and explicitly given, “individuals really need to be given the details on this so they can decide whether or not they’ll engage with the product and will they really be able to exercise choice and control.”
At this stage, Falk said she is not objecting to the idea of Libra but pointed out that Facebook needed to show it can meet community expectations. “This is an opportunity to show to the 17 million monthly Australian users of Facebook how it’s going to secure and protect personal information, so we will get that information and go from there.”
New Zealand’s main regulators, the Reserve Bank of New Zealand (RBNZ) and the Financial Markets Authority (FMA), have indicated a strong interest in digital currencies so far. The RBNZ has been keeping an open mind to Libra, emphasizing on the value within the Libra system regulation surrounding it would link back to the existing banking system.
The RBNZ has been focusing on monetary policy and financial stability on private crypto and how the public reacts to them. According to a report, the view in June of last year was that “globally, the current demand for private cryptocurrencies has been too small to pose any threat to the transmission of monetary policy.” Facebook’s current daily active users have estimated to over 1.56 billion will likely change that view this year.
The guidance issued by the FMA in 2017 highlighted that cryptocurrencies might touch on New Zealand’s regulatory regime for financial products and financial services, including fair dealing and anti-money laundering. Taking this guidance into consideration, Libra would likely be a financial product under the Financial Markets Conduct Act 2013, while Calibra, the wallet provider for Libra, would probably be operating a value transfer service.
New Zealand’s privacy legislation is currently under review; the new legislation is expected to come into force on the 1st of March in 2020. Given the use of Libra will raise other legal concerns, the new Privacy Bill was suggested to increase requirements for cross-border data transfers.
This article was originally published in Blockchain.News.
Photo: Asian Development Bank