The headwind Facebook’s Libra cryptocurrency is facing seems to be getting stronger in Asia, as regulators in China, Korea, and India all expressed serious concerns about the stablecoin.
The Libra Association and its 28 members—Facebook has been at some pains to make clear that it just has one vote in its cryptocurrency’s controlling body—has already faced serious criticisms and doubts in the U.S. and Europe, but Asia and South Asia could be make or break for the cryptocurrency.
The latest threat, and potentially one of the biggest, was a comment by India’s Economic Affairs Secretary Subhash Garg over the weekend, according to Bloomberg. Noting that the shape and nature of Libra is not clear yet, Garg said that whatever it’s design is, “it would be a private cryptocurrency and that’s not something we have been comfortable with.”
India is Facebook’s largest market, with some 310 million users, Jefferies Financial Group said in a report two weeks ago. The strategists added that emerging markets, especially India, would be key top Libra’s success.
That may be a big hurdle. India’s central bank is in court to uphold a virtual ban on cryptocurrencies, while the government is considering a complete ban on buying, selling, or mining cryptocurrencies.
In South Korea, where there are about 43 million Facebook users, the Financial Services Commission said on July 5 that Libra has the potential to be a serious threat to the traditional banking industry. Potential issues include moving capital out of countries while decreasing central banks’ ability to control this movement, as well as diminishing traditional banks’ solvency, and increasing the risk of bank runs during financial crises.
While Facebook has no presence in China—and cryptocurrencies are banned in the country—Libra still challenges Chinese financial sovereignty, Wang Xin, director of the People’s Bank of China (PBOC) research bureau, said on July 8.
At a conference, Wang rhetorically asked if Libra “is widely used for payments, cross-border payments in particular, would it be able to function like money and accordingly have a large influence on monetary policy, financial stability and the international monetary system?”
That is a question the PBOC is paying “high attention” to, he added.