In a Financial Times opinion piece, Facebook Co-founder Chris Hughes contends that the social media platform’s Libra cryptocurrency could move power into the wrong hands. At the same time, he noted that regulators should not underrate the disruptive potential of the cryptocurrency.
Hughes pointed out that decisions surrounding the security, administration and underlying assets of Libra will be made by the Libra Association, which he said is “essentially Facebook and its largely corporate partners.” He did, however, observe that the company has “smartly” only given itself a single vote on the commission in order to prevent complaints that the coin would provide dangerous powers to a single firm.
Even so, Hughes wrote in the piece, “That doesn’t make the prospect of Libra’s success any less frightening. This currency would insert a powerful new corporate layer of monetary control between central banks and individuals. Inevitably, these companies will put their private interests — profits and influence — ahead of public ones.”
He also noted that “unless regulators jump in quickly, these for-profit companies will set the standards for identity verification, at least in the short run, as well as defining the rules and enforcement around the privacy of transactions and what to do in case of theft.”
The news comes as Bank of England (BOE) Governor Mark Carney said Facebook’s recently said Libra digital currency can’t be the same unregulated type of service that Facebook is. “The Bank of England approaches Libra with an open mind but not an open door.” Carney said, according to reports. “Unlike social media … the terms of engagement for innovations such as Libra must be adopted in advance of any launch.”
Carney’s remarks were part of a planned speech with Finance Minister Philip Hammond, who was expected to talk about the dangers that could be caused by a no-deal Brexit could cause. (An effect might be a vote for Scottish independence.) One thing he wants to do right away is to enhance the coordination between financial regulators in the country.