If Facebook attempts to become a money transfer service or bank without the required licensing, they will have their offices raided and their doors locked on them. This is something Governments don't tend to mess around with.
FB is banking (pun unnintended) on the regulators and goverments being absolutely useless lately. Both AirBnB and Uber built empires on ”What if we just ignore the rules”
Exactly. Municipal regulators were unprepared for somebody with a billion dollars willfully breaking laws. And the laws were not a huge deal. For financial regulators, it's their bread and butter, and the laws are most definitely a big deal. Money laundering is a problem they are very serious about because it enables so much other crime.
I'm sure Facebook would not be dumb enough to step in front of that train, but if they did, it would run them flat.
There's also a sort of 9/11 effect going on here. The reason the 9/11 hijackers pulled it off was that nobody expected them to use the planes as giant suicide bombs. Previous hijackings generally ended peacefully, so everybody just stayed chill. But that window of opportunity expired before they managed to crash the 4th plane. Now nobody's just going to sit quietly through a hijacking.
Similarly, I think the reason Uber and Airbnb got away with so much lawbreaking is that it was novel to have nominally respectable companies blatantly committing a wide variety of crimes. But these days, tech companies get a lot of suspicion. Regulators are not interesting in getting caught flat-footed again. And that was true 5 years ago; SF vigorously shut down a bunch of entrepreneurs that wanted to sell public parking spaces back to the public: https://www.govtech.com/transportation/SF-Demands-MonkeyPark...
The feds can come and shut down all of FB over money transmittal, they don't have to limit the shutdown to only the money parts. That's a huge risk to take. If Uber was shut down for violating taxi rules, they only had an unlicensed taxi business.
Seems hard to have any prominent integration without having libra related infrastructure on fb servers, and all infra with ”libra” on it is likely to get seized in a raid.
But sure, if libra is just an altcoin on unrelated hardware then fb won’t be affected.
> Seems hard to have any prominent integration without having libra related infrastructure on fb servers, and all infra with ”libra” on it is likely to get seized in a raid.
> But sure, if libra is just an altcoin on unrelated hardware then fb won’t be affected.
A company as large as fb has the means to segregate application hardware. Hell, even smaller companies do this for liability reasons. If fb didn't it would be pretty lazy and ill conceived.
Is this the same feds who all have Facebook accounts, including their families, children, relatives, bosses, and so on? Including everything they buy, everything they look at, their location, and complete profiles of their personality, photos, photos that were taken OF them by other people, likes and dislikes, dirty secrets, and so on?
It sure would be a shame if FBI directors in charge of such an investigation were cheating on their wives or were illegally getting kickbacks from contractors. Would be absolutely inconceivable that Facebook might even leak that information to their friends at the CIA or NSA and call in a favor.
AirBnB and Uber just kinda did it first and then asked permission. Facebook's only tiny hope of that strategy working was to announce Libra as being available first, not announcing the plan to governments first.
Plus, taxi and hotel regulations are a very different situation than laws intended to prevent international money laundering, tax evasion, sanction breaking, or black market economies.
The difference is that Airbnb and Uber has a lot less to lose. If they got shut down by the govt they could just lose some VCs money. Facebook has a lot more on the line.
Further to that point, Airbnb and Uber are primarily dealing with issues related to local laws, for example in New York City or San Francisco.
New York City shutting down Airbnb doesn't shut them down in the thousands of other cities they're active in. If Boise Idaho restricts Uber, that doesn't suddenly restrict them in Chicago.
The US Government has an entirely different kind of power and when it comes to protecting the global reserve currency, the one guarantee is that they will use it.
But airbnb and uber were at a stage where they didn't have much to lose when they first challenged these regulations. Facebook is one of the most well known companies in the world.
FB is going to find useless regulators and governments though. FB is a global company. What's the chance that every country in the world is on top of their game?
The US cares about money laundering by US entities abroad as well and there's no get out of jail free card for "well, the other guys said it was okay". On top of that one of their selling points is how universal and frictionless it's supposed to be. If they can only operate in countries with useless regulation they're kind of doomed on that.
My understanding is that they are limiting the relationship between Facebook as a corporate entity and Libra, at least on paper. Whether regulators treat it this way is another matter.
But FB must be spending a lot on lobbying, and that should help them avoid any major surprises regarding enforcement actions.
The insinuation is that lobbying is bribery (and on the more egregious end of the spectrum, it is). In countries where lobbying isn't legal, it would at least help much less.
I think the idea is that if lobbying is legal, then it is regulated and thus how much it can help is limited. In countries where lobbying is illegal, it can take a form of bribery and then you can (potentially) achieve a bit more in this 'unregulated-bribe-anyone' space...
Even if the regulators let them get away with that, nobody in Europe is particularly in need of a cryptocurrency for moving money around Europe, we have near-instant money transfers for free (or close to it) through our banks.
I guess they could go for the remittances market, but that's really not where I see Facebook wanting to go.
Messenger isn't all that popular outside of north america. Doesn't matter how much money transfer options you add to a program if nobody is using it. I do wonder what happens if any non WeChat thing starts going for banking type functionality (legal or not).
Messenger, WhatsApp and Instagram are all owened bu Facebook. Facebook is already working on merging them into a single app, to be rebranded in the near future.
WhatsApp and Instagram have huge popularity outside of North America
They are building a common protocol for messaging to be used interoperably, from what I have read. The apps themselves will likely remain separate from a user perspective, most likely
Ugh stop turning everything into an American lawyer singularity. I said FB Messenger isn't very popular outside of NA and it isn't. What more do you want from me.
There is north america, a few african countries, france and a few eastern European countries and australia. The rest is practically WhatsApp except for china which is WeChat.
This fact is only an effect of the EU, it's a single banking system. That's like saying we don't need a cryptocurrency system in the US because it's easy to move money from California to New York :/
I opened one about 2 years ago and don’t think it took more than a few days (it was annoying though, several visits to bank branches to ink sign documents). Did something change since then?
You don't "just get" an emoney license. When you apply for the license you sign up to a bunch of regulatory scrutiny most of which seems to be antithetical to this kind of project.[1]
The UK financial regulators are not dumb and have thought this through.
The licensing is not the issue. It is the middleman charging fees for simple transactions that they will totally skip. Building that before was hard but the blockchain solved that
As far as I can see sending money with Libra would be quite similar to sending money with say Ethereum. Transfering ETH from one wallet to another is semi anonymous and cheap, like one US cent. However converting fiat to ETH or back at the other end costs in the tens of dollars and requires things like being videoed holding your passport for KYC and AML. It tends to take a few days to be approved. I think the KYC process costs companies like $40. So it's not a cheap or quick process if you include that stuff and fairly traceable compared to cash.
Facebook may have an advantage on KYC as it already knows it's clients through their facebook activity and so may be able to get the costs lower which could be a competitive advantage there.
>Facebook may have an advantage on KYC as it already knows it's clients through their facebook activity and so may be able to get the costs lower which could be a competitive advantage there.
What Facebook might know about someone is completely worthless when it comes to KYC. In the country I live there are even some government issued identity documents that won't cut it.
I think you're right on the money (no pun intended). The technology is there. If government doesn't get in the way (which they will), market forces would dictate that a company (Facebook or other) would use this technology (Blockchain) to make these sort of transactions more efficient and cost-effective for everyone willing to adopt them.
which is more the reason to support them in creating such currencies. a private currency provider would open up freedom to so many people that it is only natural for governments, read : politicians, to prosecute such attempts directly and indirectly. they lost control of the message so they damn well make sure they don't lose control of the purse strings by any means necessary.
(by message I mean the internet has foiled politicians pretty much using "trusted" organizations as mouth pieces and revealed many for who they are and also prevented scandals and whistle blower stories from being buried or turned)
I don’t think you should use “facebook” and “freedom” in the same sentence.. unless you mean “freedom to ban anyone for life for any reason without any oversight”
You don't seem to know much about gov financial regulation.
1. Gov didn't embrace bitcoin, they regulated it. The exchanges have to do KYC and AML monitoring and report activity.
2. If you think FB doesn't 100% control it, I have a bridge to sell you.
3. This doesn't really mean much at the end of the day. It's a tactical decision with low impact on regulations.
What you're failing to appreciate is how important it is for governments to control their financial operations. They don't make it hard just to make it hard. They make it hard because if they don't criminal activity will flourish.
The thing is, money is an iou from the government. If people start using other ious, the influence and power of the government will fade. Result is that libra will control a country.
Bitcoin does not have an "office" that governments can raid. Governments never embraced Bitcoin, they have no choice. It is not within reach of their usual methods of control (law enforcement, diplomacy, warfare).
It would be very easy for the government to shut down Bitcoin:
- Shut down all bitcoin exchanges hosted in the United States
- Make it illegal for banks, credit unions, and other commercial financial institutions to allow their clients to make transactions with a crypto exchange (regardless of the countries where the exchange is hosted), or a blockchain
If you can't convert your bitcoin into fiat, then your only option is to use your btcs to purchase goods and services directly, which would further disincentivize businesses from accepting bitcoin as a form of payment. And if you can't send fiat to an exchange, you can't increase your holdings.
This would require you to open a foreign bank account, which you must tell the U.S. government about. Not telling them is a serious crime. See the Foreign Account Tax Compliance Act
Bitcoin mining is actually quite centralized in a few players; and the exchanges have established offices. The gov.s could have done some serious damage.
They're only centralized because free markets tend to favor centralization. Should the big mining operations be shut down, it would become instantly profitable for smaller miners to switch on again
In the beginning...1993 or so, before Altavista, everyone I knew doing web search came from TLA contractors where they had been long working on similar projects.
