EU antitrust regulators are probing Facebook’s Libra
Regulatory scrutiny of Facebook's Libra currency is to heat upEuropost
Facebook's less than two-months-old Libra cryptocurrency project is being probed again, this time by European Union antitrust regulators. According to documents, seen by Bloomberg, the European Commission have begun conducting a preliminary investigation on "the potential anti-competitive behavior," related to the Libra Association.
The investigation, still in its early stages, is examining the governance structure and membership of the Libra Association. And it comes shortly after the EU authority expressed in a questionnaire its concerns that Libra would unfairly shut out rivals.
The purpose-built, independent nonprofit association is meant to govern the digital currency. Founding members include the likes of MasterCard, PayPal, Visa, eBay, Spotify, Uber and Lyft. According to Bloomberg, regulators fear that the way information will be exchanged and the use of consumer data could create "possible competition restrictions." The EU is also examining the integration of Libra wallets into Facebook’s WhatsApp and Messenger services.
The European Commission is not the first regulator to have raised concerns about the digital currency, which will be run by a group of companies, including Facebook, as part of the Libra Association. The US Treasury has already expressed its "serious concerns" regarding Libra. In particular, it noted fears that the digital currency could be misused by bad players, like money launderers and terrorist financiers. Facebook promised it won't make Libra available until regulators are onboard. Facebook’s cryptocurrency chief David Marcus has then faced questions from the House Financial Services committee, during which one representative told him that they didn’t think Facebook should launch Libra at all.
Lawmakers in France and Germany were also quick to object to Facebook becoming a “shadow bank” with its own sovereign currency. Earlier this month, data privacy regulators around the world asked for transparency about how the Libra Association will process personal data.
Facebook itself has said that it won’t launch Libra until it has “fully addressed regulatory concerns” surrounding the digital currency. But that will likely be an ongoing and uphill battle. A charter is yet to be put in place for the Libra Association, meaning the rules for how Libra will operate are still unknown. Given the amount of interest regulators have already shown the currency, any charter produced is likely to face intense scrutiny.