Facebook unveils its plans to launch its very own cryptocurrency, in a hope to “transform the global economy.”
The currency, named Libra, is developed by Facebook, but the company intends to share control with a consortium of organizations, including venture capital firms, credit card companies, and other technology giants.
At launch, Facebook said that users can send Libra directly using Facebook Messenger and WhatsApp, which are both owned by Facebook.
Eventually, Facebook hopes Libra can be accepted as a form of payment, and other financial services can build their products on top of its blockchain-based network.
To control Libra, Facebook is launching a subsidiary company called Calibra.
This company aims to develop products and services that are based around Libra. Using this company, Facebook also intends to make money out of its cryptocurrency, first by starting launch of its digital wallet.
Facebook also wants to make Calibra to handle Libra integrations for Facebook’s other products.
"Libra’s mission is to enable a simple global currency and financial infrastructure that empowers billions of people," explained Facebook on its Libra whitepaper.
Libra is meant to be a stablecoin - a digital currency that doesn’t fluctuate much because it’s supported by established government-backed currencies and securities.
But given by Facebook's influence in the tech world, and following its frequent mishaps and security problems, as well as its exacerbating immense political and social issues throughout the world, the announcement of Libra was followed by immediate backlash from regulators.
Plenty of people aren’t happy about the idea of Facebook getting into financial services.
The Senate Banking Committee, for example, announced a hearing entitled “Examining Facebook’s Proposed Digital Currency and Data Privacy Considerations,” to question witnesses over Facebook’s Libra.
Facebook’s plan Libra also met with harsh criticism from lawmakers, as well as calls for investigation into the potential consumer risks.
According to Senator Sherrod Brown (D-OH), a top Democrat on the committee and was one of the first lawmakers to question Facebook’s Libra product:
"We cannot allow Facebook to run a risky new cryptocurrency out of a Swiss bank account without oversight. I’m calling on our financial watchdogs to scrutinize this closely to ensure users are protected.”
According to Chairwoman Maxine Waters (D-CA):
"Given the company’s troubled past, I am requesting that Facebook agree to a moratorium on any movement forward on developing a cryptocurrency until Congress and regulators have the opportunity to examine these issues and take action."