Just hours after Facebook announced its new Libra cryptocurrency project, European politicians issued stark warnings calling for tighter regulation of the platform. Some of the most vocal opponents are French Finance Minister Bruno Le Maire and Markus Ferber, a German member of the European Parliament.
In response, Fred Roeder, Managing Director at the Consumer Choice Center, said that “these political threats were harmful to consumer choice, and would ultimately backfire”.
“Overseeing regulation on Internet and financial firms is important, but the ’regulate first, innovate later’ mentality that came in response to Libra should give every Internet user a reason to be concerned. If every new Internet innovation now needs to be approved by lawmakers, that sets a dangerous precedent for the future of consumer choice online,” said Roeder.
Roeder believes that consumers have the right to choose if they want to use cryptocurrencies, or social networks and are aware of the great risks and benefits that go along with that. People want alternatives, especially with new digital tools, which is why there is so much interest from consumers.
“Allowing political figures to freeze future innovations and projects because of temporary partisan politics will keep European consumers from being able to enjoy the goods and services they enjoy online, not to mention being able to connect with thousands of their friends and family online,” he says.
“And it won’t stop here,” he warns. “If these threats continue, Bitcoin and dozens of other cryptocurrencies, as well as other social media platforms that millions of users have adopted, will also face well-intended but flawed regulation.We must have smart regulation that encourages competition, protects privacy, and ensures consumer choice. Prior restraint of innovation would be the opposite of that,” said Roeder.
But not everyone agrees that state pressure to regulate Facebook’s foray into finance is an oppressive one. John Biondi, VP of Experience Design at Nerdery, warns: “It’s hard to imagine a bigger, worse idea than Facebook launching a cryptocurrency. With 2.7 billion users, more than a third of the world’s population, Facebook forms the biggest community in history. Unfortunately, it’s created that community pretty much entirely by selling people’s data without permission. That’s not the organisation I want as the new central bank.”
He continues: “Even with its questionable data practices in the spotlight over the last several years, we can’t assume all Facebook users are aware of the privacy issues. An example of this is single sign-on through Facebook – and other online platforms like Twitter, Google, etc. Users choose to sign in to other platforms using their Facebook information because it’s fast and easy but there are tradeoffs and consequences for using what seems like a benign tool. Facebook doesn’t want to make your life easier, they want access to your data and they know you’re impatient in that moment. The same is true for Libra. The ability to quickly pay for something is enticing, but Facebook is a business that has its own interests and shareholders at heart.”