On Tuesday, June 18, Facebook’s whitepaper release for its native Libra cryptocurrency and the Libra Blockchain network certainly took the crypto world by storm. After months of speculation, Facebook finally released the blueprint of its plans to disrupt the global financial system.
The announcement was enough to make lawmakers and bankers nervous as Facebook faced instant backlash from the camaraderie. Lawmakers are calling for strict regulations and scrutiny of Libra citing Facebook’s shady past of dealing with user privacy issues.
NEW: The top lawmakers on the House Financial Services Committee are targeting Facebook’s new cryptocurrency, #Libra.
Chairwoman Maxine Waters says it’s another example of Facebook’s “unchecked expansion,” urges execs to testify and calls on FB to stop working on the currency. pic.twitter.com/xOklWsfLdx
— Brian Fung (@b_fung) June 18, 2019
Adding to the chorus further, Facebook’s Libra project is giving jitters to Australian Banks who think that the social media giant will just overwhelm their existing business model. The banking system is seeing a potential threat in Libra which could dethrone them from their own industry.
Australian Banks See Libra As a Clear Threat
Australian banking institutions have raised alarms saying that the emergence of Facebook’s Libra cryptocurrency will be ‘clearly a threat’. Speaking to The Sydney Morning Herald, NAB’s business banking chief Anthony Healy said:
“They’re not the first company to launch a crypto payment solution, but they do have immense reach obviously through their Facebook platform. With a billion plus users on its platform, it is clearly a threat.”
NAB chairman and former Treasury Secretary Ken Henry saw this coming back during the crypto bull run in November 2017. Henry warned about the entry of big tech giants and disrupt the global payments market.
Henry said that banks could be “challenged beyond our ability to cope with the big IT platform providers. There’s a question that has to be asked, particularly for Australia. What pain point is it trying to solve?”
Moreover, Asher Tan, the founder of Australian Bitcoin exchange CoinJar says that what is concerning banks more is the fact that there’s no banked named as the “Founding Member” of the Libra consortium, who will govern the cryptocurrency. Mr. Tan notes that Facebook’s message is clear to bypass traditional institutions and directly approach businesses and retailers.
Mr. Tan notes that all eyes are now on whom Facebook can choose as its potential partner for the Libra consortium.
Not Everyone Seems Worried
While Facebook’s Libra might seem like an imminent threat, other financial experts are skeptical of the potential impact it can have on the local financial sector. David Ojerholm, of payments consultancy The Initiatives Group, says that there won’t be much disruption in local finance. He notes that its unclear to him why would highly-banked Australians exchange their dollars for Libra to make domestic purchases.
Further, he notes that even if Australians want to purchase Libra, they would still need a bank account to make the purchase. “At least in the short-to-medium term, there appear to be plenty of points where the bank will still be involved,” Mr. Ojerholm said.