Facebook launched Libra, a cryptocurrency, in June 2019. Governments immediately shredded it, say there was no way in hell Libra would be allowed. And for good reason.
Libra AML (Anti Money Laundering) and KYC (Know Your Customer) were so non-existent is seems deliberate on Facebook’s part. Move fast, break things, then get so big so fast it would be difficult for governments to regulate them. That was the plan.
Among the many stupid things Facebook did was not consulting with governments first, explaining what they wanted to do. Instead Facebook assumed central banks would allow a pseudo currency with few safeguards to prevent money laundering to be launched worldwide.
Not only were the controls vague, it was unclear what Libra actually was. It’s not really a currency, although could be used to make transactions. But that requires having huge amounts of reserve. Which would be invested in short-term securities and based on a basket of currencies. Having that much money sloshing around could upset things, especially since practically no one trusts Facebook.
Libra is probably more like an ETF than anything else. ETFs are, and should be heavily regulated. It could also be regulated as a currency.
And, as always with cryptocurrencies, there is much grandoise babbling about how Libra and the blockchain will empower the unbanked, make for frictionless transactions, and won’t it be wonderful when the damn gummit can’t track our money.
In truth, there are lots of ways to help the unbanked that already exist. Like debit cards, Venmo, and PayPay. H&R Block has an Emerald Card that clients get IRS refunds on. Many have their paychecks deposited on it too. It works fine for them, and AML and KYC safeguards are inherent in all of them.
Facebook’s real objective probably was to track all purchases done on Libra, then sell that data to advertisers. It’s dead, for now.
David Gerard details Facebook’s attempt to launch Libra, how and why it failed, and does so with humor. I highly recommend the book.