Lael Brainard, a member of the U.S. Federal Reserve’s Board of Governors who chairs several Fed committees, has highlighted that Facebook’s Libra could pose risks to users owing to lack of clarity over their rights with respect to the token’s underlying assets and to the system overall.
In a speech on Wednesday she said Libra would have to make promises in three broad areas: anti-money laundering, consumer protection and the types of financial transaction being undertaken by each partner.
Several regulators have warned about the potential for criminals to use Libra coins to launder money, given Facebook has said it would not necessarily monitor everyone who eventually uses its system.
As previously reported, Financial regulators have the reputation of been critical of the Facebook crypto, which may pose a threat to global financial stability in their view. The heads of the companies are concerned about how Facebook manages the private date of its users. France and Germany have pledged to block the cryptocurrency.
Visa, MasterCard, eBay, Stripe, Mercado Pago announced on October 11 they will no longer be part of Facebook’s libra cryptocurrency project. Lack of support from key payment systems can have serious consequences for the Facebook crypto project. Their withdrawal clouds the Libra’s future and calls into question its success.