Facebook's new cryptocurrency raises privacy concerns

Facebook announces Libra cryptocurrency with a massive list of partners

Facebook announces Libra cryptocurrency with a massive list of partners

The Libra Association, which effectively acts as a governing body for Facebook's cryptocurrency, also counts financial institutions and payment providers like Visa, Mastercard, Paypal and Stripe as well as companies like Uber, Lyft and Ebay among its members.

Facebook said it hopes Libra will make it easier for the estimated 1.7 billion unbanked adults worldwide to access banking services and transfer money electronically.

Facebook hopes to not only power transactions between established consumers and businesses around the globe, but offer some consumers access to financial services for the first time.

In a note to clients on Monday evening, SunTrust's Sal Catrini said: "Facebook's cryptocurrency project "has the potential of putting the company front and centre in areas beyond advertising, including commerce and financial services".

Having the currency operate on a separate platform means Libra users' activity is separated from Facebook, meaning it's not shared with other parties, such as advertisers.

"Freedom, justice and money, which is exactly what we're trying to do here", he said.
"For now, it really comes down to execution, and how comfortable consumers feel around Facebook and cryptocurrency".

Libra will be different, Facebook says, in part because its value will be pegged to a basket of established currencies, such as the U.S. dollar, the euro, the yen and others. Shares in Western Union fell 2 per cent in morning trading. "The wallet will be available in Messenger, WhatsApp and as a stand-alone app", said Shaarik Zafar, public policy manager at Facebook.

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Calibra would conduct compliance checks on customers who want to use Libra, using verification and anti-fraud processes that were common among banks, Facebook said. "One possible reading is that this is an attempt from Facebook to try and divert a little bit of all the flack it had for all its invasion of our privacy".

Cryptocurrencies were initially designed as an alternative to conventional money, outside of the control of central banks and governments.

In the meantime, investors have lost hundreds of millions of dollars through steep price drops and crypto-exchange hacks.

But Facebook's status as a Silicon Valley behemoth touching billions of people around the world could help legitimise what has so far been a niche and volatile market. Each gets one vote on substantial decisions and firms must invest at least $10 million to join. Facebook does not plan to maintain a leadership role after 2019.

The California-based company has big aspirations for Libra, but consumer privacy concerns or regulatory barriers may present significant hurdles. "We can not allow Facebook to run a risky new cryptocurrency out of a Swiss bank account without oversight", said Senator Sherrod Brown, the top Democrat on the Senate Banking Committee, in a statement.

Facebook said it won't share account information or financial data with Facebook or any third party without a users' consent - meaning that account information can't be used to improve Facebook's ad strategy.

Sri Shivananda, PayPal's chief technology officer, said the project was still in its "very, very early days" in terms of getting necessary regulatory approvals and consumer buy-in.

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