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Facebook Temporarily Abandons Cryptocurrency Plans Amid Congressional Pressure to Regulate

Facebook Temporarily Abandons Cryptocurrency Plans Amid Congressional Pressure to Regulate

It appears Facebook’s plans for total world domination have been placed hold as Libra Coin — the social network’s controversial cryptocurrency — has been delayed following intense regulatory backlash from Congressional lawmakers, according to two reports published by both Bloomberg and The Information earlier this month.

The reports cite multiple Facebook associates, revealing the social media giant has decidedly scrapped Libra as the centerpiece of Facebook’s planned digital payments program. In an effort to avoid the eyes of regulation the company has instead decided to shift its support to multiple established currencies, such as the US dollar and the Euro, rather than release the program with a key focus on Libra. The Libra Association confirmed the cryptocurrency will be introduced at a later date alongside the Calibra digital wallet.

When Facebook originally announced Libra in June 2019, it was described as a revolutionary yet mainstream cryptocurrency to be readily available for over 1.7 billion people — regardless of their bank account ownership — allowing them to send blockchain-based money across the world as easily as sending a text message. At best, it seemed to be a technical impossibility set to be canceled, and at worst an irresponsible plan doomed for failure. Calibra was originally slated to launch during the summer of 2020, with full crypto functionality, whereas the reports indicate it will now launch during the fall, restricted to government-backed currencies. 

It appears only Calibra’s storage and transfer features will launch on schedule for both Facebook Messenger and WhatsApp, though how these features separate themselves from the entire site is unclear. Sending only established currencies in this network would be no different than existing payment processors like PayPal, which is a stark deviation from the original cryptocurrency plan. This also comes at a time when lawmakers are beginning to introduce regulatory laws like the “Keep Big Tech Out Of Finance Act,” which would cost any big tech company over $1 million in daily fines for functioning as communications companies, financial institutions, and issuing unaccountable currencies. 

This proposal, however, was seemingly anticipated given how Facebook created the non-profit Libra Association as a means to make Facebook and its Calibra subsidiary only two members of its 28 member coalition, without strict centralized ownership. This gives Facebook the legal framework to avoid the responsibilities of Libra and Calibra, all the while reaping the benefits of them as though they’re all one and the same, so long as they pay their dues to their associates. Regulators still have a case given Facebook came up with the idea, had planned to widely adopt the cryptocurrency and digital payment system, and is an active financial participant in Libra.

This concern grows wider when you get into the possibilities of Libra as a form of money lending, which was expressed by Facebook during the original Libra announcement. “Chief among the concerns was the ability for the currency and the technology it sat on top of to allow people to move money around undetected and away from the banking system, potentially leading to money laundering and other criminal activities,” acknowledged journalist Nick Statt of The Verge. These concerns led to the eventual departure of Libra’s key payment associates such as Mastercard, PayPal, Stripe, and Visa, requiring Facebook and its coalition to reconsider the plan.

This doesn’t mean Facebook has fully abandoned the dream of a global coin to be used by the online masses, as suggested in false claims made and retracted by The Information, but it’s apparent they are at least deviating from their original schedule, whether based on good faith concerns or bad faith apprehension over a fight between business and government. And there is a case to be made Facebook should pay back its users for the social capital they have fostered, comprised of friends, family, co-workers, lovers and the wider society which make up Facebook. They may have made the pipelines, but not the relationships which make it all have value.

“Facebook remains fully committed to the project,” a spokesperson told The Verge, responding to these false claims Libra coin was completely terminated. “Reporting that Facebook does not intend to offer the Libra currency in its Calibra wallet is entirely incorrect.” This was followed Dante Disparte, head of Policy and Communications at the Libra Association, reassuring BBC: “The Libra Association has not altered its goal of building a regulatory compliant global payment network, and the basic design principles that support that goal have not been changed nor has the potential for this network to foster future innovation.” Whether these innovations come at the expense of the users should remain a concern to us all.