![](\"https:\/\/images.theconversation.com\/files\/286737\/original\/file-20190802-117871-qda2ij.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=926&fit=clip\")
<\/p>\nBy: Trevor Vonu<\/p>\n
<\/p>\n
Starting in May of 2019, Facebook began to develop its cryptocurrency, known as Libra.[1]<\/a> The social media giant hopes to use its worldwide reach to help Libra revolutionize the exchange of currency in the modern world.[2]<\/a> Libra aims to allow consumers, especially those seeking an alternative to traditional currency and banking, to buy products or simply exchange money with virtually zero fees.[3]<\/a> By eliminating transaction fees, a common staple of credit card companies, Libra could have a profound impact on the world\u2019s paperless exchange of money.[4]<\/a> Unlike its competitors, namely Bitcoin and Ethereum, Libra aims to maintain a stable price point, providing merchants and consumers comfort in using Libra as a regular method of exchange.[5]<\/a> Another problem plaguing cryptocurrency pioneers, is the issue of widespread acceptance; most merchants only accept traditional forms of currency and lack the means and\/or desire to allow payment via cryptocurrency.[6]<\/a> This issue has proven to be quite challenging to current cryptocurrencies, however, Libra has the potential to become integrated throughout American and foreign economies.[7]<\/a> Facebook already has a relationship with millions of advertisers and businesses.[8]<\/a> With its foot already in the door, Facebook may be able to provide Libra the push it needs to become a common form of exchange among merchants.<\/p>\n However, it did not take long for lawmakers to push back against Facebook\u2019s launch of Libra. Throughout the latter half of 2019, Facebook has been hit with a seemingly endless barrage of questions and concerns surrounding Libra.[9]<\/a> Uneasiness concerning Facebook\u2019s entrance into the financial arena should not come as a surprise, considering Facebook\u2019s past struggles with user privacy and protection of personal information.[10]<\/a> Lawmaker\u2019s and regulatory concerns, however, stem far beyond the privacy interests of its users.[11]<\/a> The U.S. Treasury Department voiced its concern regarding Libra\u2019s potential to be misused for money laundering and financing criminal activity.[12]<\/a> Based on the government\u2019s concerns, it seems evident that the current regulatory infrastructure is simply not prepared for the shock that Libra could bring to the current financial system.[13]<\/a> Further, widespread incorporation of Libra could drastically hamper the Federal Reserve\u2019s ability to moderate United States financial policy.[14]<\/a><\/p>\n Expecting an avalanche of regulation and red tape, several of Libra\u2019s partners, including Visa, Mastercard, and PayPal have already abandoned the project, at least for now.[15]<\/a> Due to the government\u2019s reluctance to accept Libra\u2019s entrance into the finance arena, Facebook faces an uphill climb in its mission to launch its cryptocurrency brand.[16]<\/a> However, Facebook shows no signs of abandoning the project.[17]<\/a> Consequently, the U.S. government will likely do whatever it can to maintain regulatory control over Libra.[18]<\/a><\/p>\n Stemming from the controversy sparked by Facebook\u2019s announcement of Libra, the House of Representatives held a hearing primarily purposed to determine how Libra would affect the current financial system.[19]<\/a> Some of the concerns voiced in the hearing include financial regulations, consumer protection, and whether Libra coins should be regulated as securities.[20]<\/a> Perhaps most notably, the lawmakers discussed Libra\u2019s potential impact on the U.S. financial system, as well as public policy concerns.[21]<\/a> Evidently, Libra is currently seen as a serious threat to the Federal Reserve\u2019s ability to regulate currency.[22]<\/a> As such, Facebook and Libra will likely be subject to continued governmental oversight as lawmakers work to ensure that the government will be able to maintain a degree of control of Libra\u2019s impact on the American financial system.[23]<\/a> Consequently, at the time of its launch, Libra will likely be less innovative than initially expected.[24]<\/a> That said, it will certainly be interesting to see whether Facebook unveils Libra as it was originally designed.<\/p>\n image source:\u00a0https:\/\/images.theconversation.com\/files\/286737\/original\/file-20190802-117871-qda2ij.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=926&fit=clip<\/p>\n [1]<\/a> AnnaMaria Andriotis, Peter Rudegeair, & Liz Hoffman, Wallstreet Journal (Oct. 16, 2019, 12:19 PM), https:\/\/www.wsj.com\/articles\/facebook-wanted-to-create-a-new-currency-it-wasnt-ready-for-the-backlash-11571242795?mod=searchresults&page=1&pos=11.<\/p>\n [2]<\/a> Id<\/em>.<\/p>\n [3]<\/a> Josh Constine, Tech Crunch (June 18, 2019, 5:01 AM), https:\/\/techcrunch.com\/2019\/06\/18\/facebook-libra\/.<\/p>\n [4]<\/a> See Id<\/em>; Outside Perspectives on the Collection of Beneficial Ownership Information<\/em>: Hearing Before the S. Comm. on Banking, Housing, and Urban Affairs<\/em>, 116th<\/sup> Cong. 15 (2019) (statement of Sen. Jack Reed, Chairman, S. Comm on Banking, Housing, and Urban Affairs).<\/p>\n [5]<\/a> Jonathan L. Marcus,\u00a0Recent Cryptocurrency Regulatory Developments<\/em>, 38 Banking & Fin. Services Pol’y Rep. 1, 7 (2019).<\/p>\n [6]<\/a> Constine, supra<\/em> note 3.<\/p>\n [7]<\/a> Id<\/em>.<\/p>\n [8]<\/a> Id<\/em>.<\/p>\n [9]<\/a> See supra<\/em> note 3, at 14-15.<\/p>\n [10]<\/a> Jonathon Shaw, The Privacy Implications of Facebook\u2019s Surreptitious and Exploitive Utilization of Facial Recognition Technology<\/em>, 31 Temp. J. Sci. Tech. & Envtl. L. 149, 150 (2012).<\/p>\n [11]<\/a> Androitis, supra<\/em> note 1.<\/p>\n [12]<\/a> Examining Facebook\u2019s Proposed Cryptocurrency and its Impact on Consumers, Investors, and the American Financial System<\/em>: Hearing Before the H. Comm. on Fin. Serv<\/em>., 116th<\/sup> Cong. (2019).<\/p>\n [13]<\/a> See Outside Perspectives on the Collection of Beneficial Ownership Information<\/em>: Hearing Before the S. Comm. on Banking, Housing, and Urban Affairs<\/em>, 116th<\/sup> Cong. 15 (2019) (statement of Sen. Jack Reed, Chairman, S. Comm on Banking, Housing, and Urban Affairs).<\/p>\n [14]<\/a> See<\/em> Andriotis, supra note 1.<\/p>\n [15]<\/a> Id<\/em>.<\/p>\n [16]<\/a> See hearings, supra<\/em> note 12.<\/p>\n [17]<\/a> See<\/em> Andriotis, supra note 1.<\/p>\n [18]<\/a> See hearings, supra <\/em>note 13, at 15.<\/p>\n [19]<\/a> See hearings<\/em>, supra <\/em>note 12.<\/p>\n [20]<\/a> Id<\/em>.<\/p>\n [21]<\/a> Id<\/em>.<\/p>\n [22]<\/a> See id<\/em>.<\/p>\n [23]<\/a> See <\/em>Marcus, supra<\/em> note 5, at 8.<\/p>\n