Why is everyone so worried about Facebook’s Libra cryptocurrency?

Analysis: The tech giant’s plans to launch its own currency might soon be the least of regulators’ concerns, writes Anthony Cuthbertson

Facebook hopes to launch its Libra cryptocurrency in 2020, but is facing significant resistance from regulators around the world (Reuters)

Facebook is once again in trouble with authorities, though this time it is for something that is yet to even happen. On Thursday, France said it would block any attempt to launch or develop the firm’s Libra cryptocurrency.

This rebuff is the latest setback for the serially scandalous social media company, in what is arguably the most ambitious project it has ever undertaken.

It all began at the start of 2018, when CEO Mark Zuckerberg revealed that his annual “personal challenge” for that year would be to explore and understand cryptocurrency. Six months later, he had set up a taskforce to develop what could eventually become a new global currency to rival the dollar.

Facebook claims Libra is designed to bring key financial services to those without bank accounts by leveraging its suite of apps like Instagram, Messenger and WhatsApp – together with its vast user base of more than 2 billion people.

But France claims that Libra poses a threat to the sovereignty of national currencies. In the UK, politicians expressed similar reservations earlier this year by suggesting Facebook is “trying to turn itself into its own country” through the development of Libra.

Such claims seem relatively tame when compared to the “flagrant displays of bulls***” accusations that US lawmakers flung at Libra chief David Marcus when he appeared at a hearing on Capitol Hill in July. He was told that Facebook was “delusional” to believe that people will trust it with their money given the company’s track record surrounding user data.

For Facebook’s part, it has consistently stated that it wants to work closely with regulators to meet any conditions required to roll Libra out. Marcus told US senators that the reason it had announced Libra so far ahead of its launch was to sort out any issues that might come up.

In response to the latest comments of French economy and finance minister Bruno Le Maire, a Libra spokesperson told The Independent that the cryptocurrency had become “the world’s most scrutinised fintech effort”, but once again said it “welcomed the feedback”.

Facebook is offering hackers a reward to discover issues with its Libra cryptocurrency (Getty Images)

But Facebook is not the only company to be working on a cryptocurrency, with rival messaging app Telegram also developing its own virtual currency called Gram. Without Facebook’s notoriety surrounding data and privacy, Telegram has managed to avoid the same level of scrutiny, and beyond its whitepaper there is little that is known about the effort.

Both of these projects could be dwarfed by a new digital currency reportedly being developed in China. According to research published last month, China’s central bank is planning to launch a state-backed cryptocurrency that could entirely eliminate the need for bank accounts.

It is hard to believe that China will give much thought to the complaints of financial regulators in the EU or the US. With 1.4 billion inhabitants, the country’s new cryptocurrency would eclipse bitcoin or any other virtual currency that has come before it. Its arrival could consign Facebook’s Libra to the footnotes of global regulators’ concerns.