Aussie watchdogs grill Facebook’s ‘global currency’ plan
FACEBOOK'S plans to set up a global cryptocurrency called Libra have hit a wall in Australia, with the nation's financial regulators demanding more information on how the social media giant will address concerns over privacy and national security.
The Australian reports that as many as eight regulatory bodies will use their "formal powers" to force Facebook to spell out more details about its Libra plans.
To date, Australian officials have not been satisfied with answers provided by the company's US executives to concerns about Libra's possible impact on financial markets.
Local regulators are worried that the new currency could lead to a wave of scams through phone-based apps, increase privacy concerns and make anti-money-laundering and anti-terror enforcement more difficult.
The regulators included the Australian Securities & Investments Commission (ASIC), the Office of the Australian Information Commissioner (OAIC), anti-money-laundering regulator Austrac and the Australian Competition & Consumer Commission (ACCC).
Documents obtained by The Australian reveal ASIC's "emerging threat and harm committee" met in July to discuss "the potential disruption to Australian financial markets posed by the Libra crypto-asset and ecosystem".
Commissioners at the meeting were warned that an "inability to effectively supervise the Libra ecosystem", in order to maintain consumer confidence in financial markets, could affect "all regulated entities" and "all consumers (and) investors".
The Australian has obtained a briefing note prepared by ASIC which warns that Libra "poses many risks and threats, including the proliferation of scams based on Libra via mobile apps".
"We also expect that we may identify more risks and threats once we have more information."
Politicians in the US are also wary about the impact of Libra, while leading Democratic presidential candidate Sen Elizabeth Warren says Facebook is already too powerful.
"Today's big tech companies have too much power - too much power over our economy, our society and our democracy," Sen Warren said.
Facebook CEO Mark Zuckerberg was grilled for six hours by the US House Committee on Financial Services last month.
In written testimony, he said: "I believe this is something that needs to get built, but I understand we're not the ideal messenger right now. We've faced a lot of issues over the past few years, and I'm sure people wish it was anyone but Facebook putting this idea forward."
Facebook's plans for Libra have stalled as it faces intense scrutiny from politicians worried about how the $US550bn (AU$880bn) company handles the data of 2.4 billion Facebook users.
Facebook has 15 million active users in Australia and further penetration through subsidiaries. This includes eight million active Instagram users and five million active WhatsApp users.
Regulators and Facebook executives from the US met in October.
In an email to the group of Australian agencies and regulators, OAIC deputy commissioner Elizabeth Hampton said: "If we don't get answers to these questions from the US-based team we will then need to consider whether formal powers are exercised where available, which may need to be done independently rather than in concert."
Facebook says Libra could revolutionise the global payments system, making it easier to send money around the world and helping the 1.7 billion people without proper banking systems to access financial services.
Earlier this year, US Federal Reserve chairman Jerome Powell said Facebook's plan to build a digital currency called Libra could not proceed until the company addressed serious concerns.
The OAIC in early August castigated Facebook after it "failed to specifically address the information handling practices that will be in place to secure and protect personal information" tied to Libra.
- This article is based on a report originally published in The Australian.