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worldwide. And 2.1 billion of those are active at least once is in a graphic identifying founding members of the Libra
a day, according to company reports. Clearly, Facebook Association. But it's clear that Libra is the brainchild of
has the reach to support a global banking play. But reach Facebook, and lawmakers and regulators were quick to
alone doesn't cut it in payments. Trust is a huge factor. raise red flags over the plan.
And Facebook already is receiving blowback on that front.
This headline from a blog post by Dave Smith, senior tech "With the announcement that it plans to create a crypto-
correspondent at the website Business Insider, sums up currency, Facebook is continuing its unchecked expan-
some of the initial public response: "Libra is Facebook's sion and extending its reach into the lives of its users,"
plan to bring cryptocurrency to the masses – but I don't said Representative Maxine Waters, chair of the House
trust Facebook enough to use it." Financial Services Committee. "The cryptocurrency mar-
ket currently lacks a clear regulatory framework to pro-
Blowback over privacy, trust concerns vide strong protections for investors, consumers and the
In case you had forgotten, Facebook has a lousy track re- economy. Regulators should see this as a wake-up call to
cord when it comes to protecting user privacy. It was re- get serious about the privacy and national security con-
vealed last year, for example, that a breach had allowed a cerns, cybersecurity risks and trading risks that are posed
data analytics firm to harvest personal information on 50 by cryptocurrencies."
million users to support political campaigning, and that
Facebook did little to alert those users about the breach or Waters added that she wants Facebook to put its plans on
recover the stolen information. hold "until Congress and regulators have the opportu-
nity to examine these issues and take action." As of this
Facebook's privacy and data security practices also are writing, the Senate Banking Committee has plans to grill
the subjects of investigations by Congress and the Federal Facebook executives and others at a scheduled July hear-
Trade Commission. The company has been trying its hand ing on Libra. The European Data Protection Supervisor,
at damage control. CEO Mark Zuckerberg is reported to the European Union's privacy protection czar, also has
have declared during a recent developers' conference that been critical, positing that the move could pose risks to
"the future is private." In addition, Facebook has been at- individual rights and freedoms by further concentrating
tempting to distance its brand name from Libra, which personal data in the hands of a tech giant. "The launch of
has its own website where the only mention of Facebook digital coin Libra by Facebook will require careful scru-
tiny from several enforcement bodies,
including data protection authorities,"
the EDPS wrote in a blog post.

Even the central banks' central bank,
the Bank for International Settlement,
sounded an alarm on the entry of big
tech firms like Facebook into financial
services, citing in a recent report the
massive amounts of data they have on
users "at near zero costs" and warning
that this "gives rise to digital monopo-
lies. I get that Facebook wants to democ-
ratize access to modern financial servic-
es, like digital payments. Kudos for that.
And kudos for trying to create a "stable"
cryptocurrency. There needs to be more
value stability if cryptocurrencies are
ever to go mainstream.
But I'm not convinced it's a good idea for
a company that has stockpiled massive
amounts of personal consumer infor-
mation to amass information on their
financial transactions as well – particu-
larly when that company has a history
of falling short on privacy protections.
And I'm not alone.

Patti Murphy is senior editor at The Green Sheet
and president of ProScribes Inc. Follow her on
Twitter @GS_PayMaven.

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