European Union regulatory response
The first regulator response to Libra came within minutes of the launch announcement, from French Finance Minister, Bruno Le Maire, who was being interviewed on French radio station Europe 1. He said that Libra could not be allowed to become a sovereign currency, and would require strong consumer protections.[54] Le Maire then warned the French Parliament of his concerns about Libra and privacy, money laundering and terrorism finance. He called on the central bank governors of the Group of Seven to prepare a report on Facebook's plans.[53] Bank of England governor Mark Carney said there was a need to keep an "open mind" about new technology for money transfers, but "anything that works in this world will become instantly systemic and will have to be subject to the highest standards of regulation."[53]
German MEP Markus Ferber warned that Facebook could become a shadow bank.[53] His colleague Stefan Berger sees Libra's power potential as a threat to the economic stability of the euro zone and its democracies: Libra could make Facebook its central bank. Berger argues in favor of the development of a European stablecoin in order to be able to offer a secure alternative to the Facebook currency.[55] Berger will be in charge of the European report of Markets in Crypto-Assets (MiCA) which will serve as base for a regulatory framework for crypto-assets.[56] On September 13, 2019, Le Maire stated that France would not allow development of Libra in the European Union, as it would have been a threat to the monetary sovereignty of states. He also spoke about the potential for abuse of marketing dominance and systemic financial risks as reasons for not allowing stablecoins to operate yet within the EU.[57]
According to a Reuters report, German Finance Minister Olaf Scholz said following a video conference of G7 finance ministers that Germany and Europe cannot accept Diem currency entry into the market while the regulatory risks are not adequately addressed.[58] Scholz stated that he does not support private-sector digital currencies, and his remarks could be detrimental to Diem and JPMorgan Coin. Valdis Dombrovskis, Executive Vice-President of the European Commission for An Economy that Works for People, stated at the Digital Finance Outreach 2020 Closing Conference that the European Union was preparing a new cryptocurrency regime that may include stricter requirements for "global stablecoin" projects like Libra. In addition, Dombrovskis stated in his address that stablecoins that function on a global scale can "present new concerns" as they can disturb financial and monetary stability.[59]
United States regulatory response
US regulators and politicians expressed concerns within hours of the mid-2019 announcement. Maxine Waters, Chairperson of the United States House Committee on Financial Services Committee asked Facebook to halt the development and launch of Libra, citing a list of recent scandals and that "the cryptocurrency market currently lacks a clear regulatory framework".[60] The US House Committee on Financial Services Democrats sent a letter to Facebook asking the company to stop development of Libra, citing concerns of privacy, national security, trading, and monetary policy.[61] Jerome Powell, chairman of the Federal Reserve, testified before Congress on July 10, 2019, that the Fed had "serious concerns" as to how Libra would deal with "money laundering, consumer protection and financial stability."[62] President Donald Trump tweeted on July 12, 2019, that "If Facebook and other companies want to become a bank, they must seek a new Banking Charter and become subject to all Banking Regulations."[63]
Other countries
David Marcus told the US Senate that the Swiss Federal Data Protection and Information Commissioner would oversee privacy for Libra, but the commissioner said that it had not heard from Facebook at all.[66] The government of Japan began the process of investigating Libra and doing an analysis on the effect on Japan's monetary policy and financial regulation. In July 2019, Japanese officials formed a working committee, consisting of the Bank of Japan, the Ministry of Finance and the Financial Services Agency, to coordinate policies to address Libra's impact on regulation, monetary policy, tax, and payments settlement.[67] The working group would coordinate measures to handle Libra's influence on regulation, monetary policy, tax, and payments settlement. This would be done before the Group of Seven meeting in France between August 24 and 26, 2019.[68]
Data protection regulators internationally issued a statement,[69] asking Facebook to protect personal data of users, and to detail Libra's planned practices for handling personal data, in the light of "previous episodes where Facebook's handling of people's information has not met the expectations of regulators, or their own users."
Privacy concerns
Industry observers have speculated whether Libra would provide meaningful privacy to its users. Facebook's plan was to let its subsidiary Novi Financial manage Libra for Facebook users, and Facebook executives had stated that Novi would not share account holder's purchase information with Facebook without authorization; however, the system was also planned to include a friend-finder search function, and the use of this function would constitute permission for Novi to combine the account holder's transaction history with their Facebook account.
According to an August 2018 report by CNBC, top data protection officials including Democratic FTC commissioner Rohit Chopra, UK Information Commissioner Elizabeth Denham, EU Data Protection Supervisor Giovanni Buttarelli, and other top regulators from Australia, Canada, Albania, and Burkina Faso in a joint statement expressed doubts over Facebook's proposed digital currency project Libra (Diem).[74] According to CNBC, Facebook confirmed that governments and regulators throughout the world were scrutinizing Libra.[74] In general, consumer advocates and public interest groups have opposed Diem on privacy grounds and rejected the tethering of financial services to mass surveillance.[75]
Antitrust concerns
Scholars highlighted several antitrust risks associated with Diem, namely, a risk of collusion between association members, a risk of tying between Diem and Novi, and a risk of exclusivity agreements if Novi is required to use Diem within Facebook environment.[76]
Fake Libra websites
Facebook tried to police inaccurate information and fake Libra websites on its platform.[77] According to The Washington Post, nearly a dozen fake accounts, pages, and groups on Facebook and Instagram advertised themselves as legitimate centres for the Libra digital currency, in some cases trying to sell discounted Libra which was not yet accessible. Numerous of these counterfeit pages used the Facebook logo, images of Facebook CEO Mark Zuckerberg, and Libra's official marketing material. The growth of fake pages and groups devoted to Libra added to Facebook's difficulties with global authorities.[78]
