Facebook’s cryptocurrency Libra is facing scrutiny from Australian regulators.
Heavily redacted documents released under Freedom of Information show the uphill battle Facebook is fighting ahead of its looming intended release early next year.
Not long after Facebook announced Libra, ASIC met with Facebook representatives who offered regulators “little new information” about the cryptocurrency.
In a preliminary report, the Australian Securities and Investments Commission’s (ASIC) Emerging Threat and Harm Committee warned that the Libra ecosystem “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,” the committee said, also warning that it was unclear “what rights Libra holders and [Facebook subsidiary] Calibra wallet holders will have”.
ASIC and other Australian regulatory bodies planned to meet with Facebook US delegates in August, putting forward an extensive list of questions designed to “provide some assurance regarding the extent to which Facebook and Libra have considered the Australian regulatory and fiscal environment in the development of these products”.
The long list of questions addressed concerns around competition, privacy, consumer protection, and the very nature of Libra, its reserve, the Libra Association, and Calibra.
ASIC Commissioner, Cathie Armour, said in an email to her colleagues that the regulators may need to “consider whether formal powers are exercised where available” if Facebook’s answers were unsatisfactory.
Although the released documents include large redacted sections, they show the regulators attempts to come to terms with a financial product that will soon be offered to the tens of millions of Australians who use Facebook products.
Libra is expected to integrate with the Facebook app ecosystem including Instagram, Whatsapp, Messenger, and Facebook.
The cryptocurrency will give Facebook a whole new set of data about its users spending and financial situation which the Office of the Australian Information Commissioner (OAIC) has flagged as troubling.
"We remain concerned that Facebook and Calibra have only made broad public statements about privacy, and they have not addressed the information handling practices that will be in place to secure and protect personal information," an OAIC spokesperson said in a statement.
Libra is on shaky ground well before any coins have even been spent.
Last month, major supporters Visa, Mastercard, and eBay pulled out of the Libra Association on the eve of its first official meeting while regulators from around the world expressed their skepticism of Facebook’s venture into cryptocurrency.