Libra, the cryptocurrency being pioneered by social media giant Facebook, may have hit a severe snag in its rollout plans. Both France and Germany have announced that the cryptocurrency will not be recognized as legal tender in both countries. Both European countries have stated concerns about Facebook overstepping its boundaries in the creation of the alternative payment system. The fear stems from the traditional use of cryptocurrency as a method for enabling illegal transactions.
In a statement issued late last week, both countries announced that they would be blocking adoption of the cryptocurrency. The stated reason was that they were concerned that Facebook did not do enough to address the current concerns for this type of monetary medium. The statement goes on to claim that Facebook is delving into an area that has traditionally been the concern of sovereign nations, i.e., the production of a monetary medium.
Not All Cryptocurrency
While Germany and France have blocked Libra, other cryptocurrencies like Bitcoin and Ethereum are free to operate. The freedom of using these alternative cryptocurrencies raises concerns that the block was instituted, not because of concerns about the security of the technology, but over issues with Facebook’s control of the currency. The impacts on the current economy of the European Union could be massive and irreversible. However, Libra seems to take a middle ground between truly decentralized currencies like Bitcoin and fully centralized monetary systems like fiat currency.
US Concerns Mirrored
The US government has also had burning questions about Facebook’s currency. Recent investigations into anti-trust dealings with the largest tech companies in the country, including Facebook, may have an impact on whether the social media giant can get their cryptocurrency off the ground. While the US hasn’t gone so far as to ban the currency, President Trump mentioned that if online companies were to become involved in the business of banking, they would need to obtain a banking charter like any other financial institution. So far, the Libra consortium has made no mention of they will be applying for a US banking charter. However, the consortium will be consulting with twenty-six major banks and the US Federal Reserve to determine the best way forward for implementing the currency.