Banks, Govs Show Continued Resistance To Facebook’s Libra

Many traditional banking institutions and governments have shown skepticism, silence and resistance to Facebook’s proposed cryptocurrency Libra, according to reports. 

Though the currency could potentially alter the financial landscape for good, many banks have simply not responded to the issue.

“We’re still learning what it is and trying to work out where we stand on it — are we an opponent, partner or do we ignore?” one person familiar with the approach to the project of one of the world’s biggest banks told The Financial Times.

Many cite the obvious regulatory issues involved with identification and money laundering, while others say they don’t like how Facebook introduced the coin.

David Marcus, who leads the project for Facebook, announced a coalition called the Libra Association to help oversee the project. So far, there are no banks on the list. 

“We have had conversations with banks. We still have conversations with banks. And my expectation is that by the time this thing launches next year you will have banks that are going to be members of this,” he said.

Netherland’s ING said that it responded to Facebook’s inquiry with a simple “no thank you.” 

Mike Corbat, who is the head of Citigroup, said that he believes in cryptocurrency but: “The challenge with cryptocurrencies is the opaqueness as to the sources of the money,” he said. “It would be outside our ability to take or send those monies on behalf [of people who hold them].”

Some banks are working on projects related to the speeding up of payments. Mastercard is reportedly working with six Nordic banks to allow real-time transfers.

Other banks have plans for cryptocurrencies of their own and are focused on that. 

In India, there has been vocal opposition to Libra.

“Design of the Facebook currency has not been fully explained,” Economic Affairs Secretary Subhash Garg said. “But whatever it is, it would be a private cryptocurrency and that’s not something we have been comfortable with.

The country and its Central Bank have practically banned cryptocurrencies from use in banks, dealing strict regulations and strong penalties. Strategists with Jefferies Financial Group said that Libra will need support and continued growth in emerging regions like India to work. Facebook users in India have doubled since 2015 and are expected to reach around 440 million by 2023.