French Economic Minister Warns Facebook over Libra Cryptocurrency

Neil Dennis

A minister in France's Finance department has raised concerns about Facebook's entry into the digital currency market demanding guarantees from the tech giant that it must never try to act as a rival to sovereign currencies. 

Facebook on Tuesday published a white paper on its Libra cryptocurrency - a stablecoin backed by a basket of five sovereign currencies - and its crypto wallet Calibra.

Government scrutiny needed

Bruno Le Maire, French Minister of the Economy, said that global governments must "ask Facebook for some guarantees" that Libra, due to be launched next year, does not have the potential to become a sovereign currency.

Among Le Maire's chief concerns is that Libra could be "diverted to finance terrorism or other illegal activities".

Accordingly, he urged central bankers across the G7 nations to raise their own questions to Facebook in order to better understand the potential scope of the Libra cryptocurrency.

Data breach worries

Another major concern comes in the wake of recent data breaches at major technology firms - including Facebook. Libra will demand all accounts are KYC (know your customer) verified, potentially putting Facebook in control of many millions of its customers' identity documents.

Addressing this concern, Le Maire said: "We have to make sure that there is no risk for the consumer, it is our role as a state to protect consumers."

Indeed, Le Maire's concerns could be justified according to a report by BeinCrypto.com that suggested Libra could be disrupted by as little as one-third of its network's producers.

Similar to a 51% attack, that can potentially disrupt any proof-of-work consensus system if just over half the network's miners collude, Libra's consensus protocols - according to the white paper - are designed to function even if a third of the network's validator nodes fail.

This means Libra could potentially suffer a "34% attack."

Step towards crypto mass adoption

Most commentators were less worried, however, and hailed Facebook's entry into the digital asset market as a key step towards legitimacy and eventually mass adoption of cryptocurrencies.

Cristian Gil, co-founder at GSR, the crypto asset market maker and liquidity provider, said:

The digital asset space has commanded institutional attention for several years. However, aside from crypto natives and a pioneering handful of companies dipping their toes in, most of the Fortune 500 has been watching from the sidelines. Yet once a company like Facebook dives in, this might be the validation the industry needs to gain mass adoption from other traditional tech and financial players.