- Japanese authorities are analyzing how to better regulate Libra
- There is a long list of countries concerned about Facebook’s crypto project
The central bank of Japan seems to be concerned about how to deal with Facebook’s Libra cryptocurrency. The digital asset is expected to be launched in 2020 to help users process transactions and payments. There are different regulatory agencies around the world that are trying to understand how to better regulate this virtual currency.
Regulators Get Worried About Libra
Since Facebook announced its digital asset, many regulatory agencies around the world have given their opinion about it and how to regulate it. According to a recent report released by Nikkei Asian Review, the Bank of Japan (BoJ) is concerned about the financial risks related to Libra and the difficulty of regulating it.
According to a BoJ official, Libra is expected to be moving money into an absolutely virtual world, so it is completely different than other forms of digital payments. Facebook’s digital currency is expected to be linked to the price of several fiat currencies that would back Libra’s value. This is the mechanism that is already used by other stablecoins in the market, including Tether.
The Governor of the Bank of Japan, Haruhiko Kuroda, remains careful about how cryptocurrencies evolve in the economy and whether they are used as a means of payment in the country. If they become used more and more they could eventually affect the financial and payment systems.
If there is an account holder at a regional bank that wants to purchase Libra, the bank would never be able to know whether the virtual coin’s operators would redeposit reserve funds with the institution. This also shows that Libra and other cryptocurrencies are a fundamental challenge to governments’ authority.
The report reads as follows:
“Should Libra's users lose faith and deplete its reserves in a rush to reclaim their cash, a real-world impact would follow. Criticisms have arisen painting Libra as a “selfish” attempt to implement only the convenient parts of cryptocurrencies while leaving real-life authorities to clean up the mess.”
Members of Congress just sent this letter to Facebook asking them to officially stop development of Libra.
Wait till Congress finds out they can’t send letters to Bitcoin🔥 pic.twitter.com/rCG1jh4RhL
— Pomp 🌪 (@APompliano) July 3, 2019
In this letter, the authorities claim that Libra could eventually rival the U.S. monetary policy and the dollar. Moreover, the representatives that signed this letter say that this raises serious privacy, trading, national security, and monetary policy concerns for users, consumers, investors and the whole economy.
Other countries such as the United Kingdom, France, Singapore, Russia and Italy have already raised their questions regarding Facebook’s digital asset. They are also all analyzing how to better regulate the virtual currency and which are the risks related to it.