Facebook's Libra cryptocurrency faces more backlash

The Indian government has joined the Libra pushback, a report says.

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The founding partners of the Libra Association include Mastercard and Visa.


Facebook's newly announced cryptocurrency Libra is facing more pushback, this time reportedly from the Indian government. India, the third-largest economy in Asia, is considering not allowing the currency to be traded at all, according to a Bloomberg report Monday.

In April 2018, all entities regulated by the Reserve Bank of India were banned from dealing in cryptocurrencies and virtual coins, although individuals trading currencies like bitcoin remains legal. However, last month it was reported that the Indian government is working on draft laws that would propose a jail sentence for any crypto users.

"Design of the Facebook currency has not been fully explained," Subhash Garg, India's Economic Affairs Secretary, told Bloomberg in an interview Saturday. "But whatever it is, it would be a private cryptocurrency and that's not something we have been comfortable with."

Facebook last month unveiled the global digital coin, which will be managed by a governing body called the Libra Association and through a wallet named Calibra. Facebook is working alongside 27 launch partners for Libra, including PayPal, Visa, Uber, Coinbase, Lyft , Mastercard, Vodafone, eBay and Spotify , but aims to have 100 members in the Libra Association by 2020.

Libra -- set to launch in the first half of next year -- is intended to be used to purchase products, send money internationally and make donations.

The Libra blockchain will be global, but it will be up to the Calibra providers to determine where they will operate the wallet service. It also won't be available in any US-sanctioned countries, or countries that ban cryptocurrencies.

Garg's office didn't immediately respond to a request for comment.

Libra has faced considerable skepticism and pushback since being announced, with US and European politicians almost immediately expressing concerns that stem from Facebook's history of data security problems

Rep. Maxine Waters, chair of the US House Financial Services Committee, said Facebook "has repeatedly shown a disregard for the protection and careful use of this data." She last week also sent a letter to Facebook executives asking them to temporarily cease plans to create Libra until security and privacy concerns are addressed.

A Senate committee has scheduled a hearing to discuss the cryptocurrency on July 17.

In Europe, France's Finance Minister Bruno Le Maire reportedly said Libra would be fine if its use is limited to transactions, but that Facebook shouldn't be allowed to create a "sovereign currency."

"Anything that works in this world will become instantly systemic and will have to be subject to the highest standards of regulation," Mark Carney, governor of the Bank of England, said about Libra at a meeting in Portugal, according to Bloomberg.

Last week, more than 30 groups including the Economic Policy Institute and US PIRG also asked asked Congress and regulators to impose a moratorium on Libra until "profound questions" are answered.

Watch this: Would you use Facebook's new Libra cryptocurrency? (The 3:59, Ep. 573)

Even Facebook co-founder Chris Hughes called the possibility of success for the social network's newly unveiled cryptocurrency "frightening." Libra will shift power from central banks to corporations, he wrote in a Financial Times op-ed in June.

"Libra will disrupt and weaken nation states by enabling people to move out of unstable local currencies and into a currency denominated in dollars and euros and managed by corporations," he wrote.

"The fewer rupees or lira a country's citizens hold, the less power the national central bank has to set monetary policy, making it harder to stimulate the local economy in times of economic stress."

Hughes left Facebook back in 2007.

First published at 3:25 p.m. PT on July 8.  
Updated on July 9 at 12:01 p.m. PT: adds more detail on where Libra will be made available.