France, Germany call for Facebook cryptocurrency regulation

France, Germany call for Facebook cryptocurrency regulation
© Greg Nash

The finance ministers of France and Germany on Wednesday called for a pause on Facebook's plans for a new global cryptocurrency until regulatory issues are resolved.

“We cannot accept to have any exchange currencies with the same kind of power and the same kind of role of sovereign currencies,” French Finance Minister Bruno Le Maire told journalists at the Group of Seven (G-7) summit north of Paris, according to Reuters.

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“There is a need for regulation, there is need for very strong commitments and obligations for that project and for the time being the necessary requirements are not fulfilled by the project Libra,” Le Maire added.

German Finance Minister Olaf Scholz said that the project cannot go ahead until those issues are dealt with.

“I am convinced that we must act quickly and that it cannot go ahead without all legal and regulatory questions being resolved,” Scholz said, Reuters reported.

Facebook's rollout of the cryptocurrency Libra has been met with political hesitancy globally.

David Marcus, head of Calibra — the new Facebook subsidiary that will be partially responsible for launching the cryptocurrency — is appearing in front on Congress for the second straight day on Wednesday.

On Tuesday, the Senate Banking Committee blasted the project and questioned whether the embattled company should be in charge of launching such an ambitious venture.

Marcus assured lawmakers that Libra will not launch until financial regulators are satisfied, though questions remain.

France has requested European Central Bank executive board member Benoit Coeure set up a G-7 task force to look into cryptocurrencies and digital coins such as Libra.

Coeure is scheduled to deliver a preliminary report at the G-7 summit.

Bank of Japan Governor Haruhiko Kuroda said the task force was likely broaden beyond G-7 countries, given the huge impact Libra could have on the global economy, per Reuters.

“If the Libra is aspiring to be used globally, countries must seek a globally coordinated response,” Kuroda said. “This is not something that can be discussed among G-7 central banks alone.”

Concerns about Libra are especially heightened by Facebook's existing global reach.

Although Libra will be controlled by a Swiss nonprofit separate from Facebook, the company will operate a virtual wallet called Calibra that is operated by a Facebook subsidiary and will be made available on Facebook’s messaging services WhatsApp and Messenger.

The Calibra wallet will be one of multiple digital wallets that will be available in the Libra blockchain, but critics have raised concerns that Facebook will encourage its user base of 2.4 billion users to use its own wallet rather than those from other companies.