France’s economy and finance minister has put the first real spoke in the wheels of Facebook’s Libra cryptocurrency project, promising to block its use in the European Union.
Bruno Le Maire, an earlier and outspoken critic of Facebook’s plan to build a stablecoin instantly usable by its 2.7 billion users, called Libra a threat to the “monetary sovereignty” of governments, according to The Guardian.
Speaking at a September 12 conference of virtual currencies run by the Organization for Economic Co-operation and Development (OECD), Le Maire said, “I want to be absolutely clear: in these conditions, we cannot authorize the development of Libra on European soil.”
On June 18, less than 12 hours after Facebook announced the Libra project, Le Maire was already leading the fight, saying “it is out of the question that [Libra] becomes a sovereign currency.”
The project is nominally overseen by an independent group of 28 partners including MasterCard, Visa, and PayPal. While it has created, funded, and organized the group, Facebook says it would have just one vote in the Libra Association.
Though Libra has received tremendous pushback in the United States, Europe, and Asia, this is the first time a senior government official has promised to block it outright.
In the U.S., House Financial Services Committee Chair Maxine Waters (D-CA) demanded that Facebook cease development on Libra until the legal and privacy issues can be worked out, while Federal Reserve Chairman Jerome Powell said that until “serious concerns regarding privacy, money laundering, consumer protection and financial stability” are addressed, the project should be halted.
Even leaving aside the tremendous privacy concerns generated by the involvement of Facebook, which has just been fined billions of dollars by the U.S. and E.U. for consumer privacy breaches, the biggest concern is Libra’s potential to compete with even the world’s strongest fiat currencies. That would give it tremendous economic influence worldwide.
Le Maire’s comments “further underscore the importance of our ongoing work with regulatory bodies around the world,” Libra Association spokesman Dante Disparte said in a statement emailed to Modern Consensus.
Leading with the rather unlikely sentiment that the association, “welcome[s] this engagement,” Disparte also said that the group had “deliberately designed a long launch runway to have these conversations, educate stakeholders and incorporate their feedback in our design.
He added, “[we] are committed to working with regulatory authorities to achieve a safe, transparent, and consumer-focused implementation of the Libra project.”To that end, the Libra Association announced on September 11 that it had applied for a payments license in Switzerland, where it is based. The Swiss Financial Market Supervisory Authority (FINMA) promised strict scrutiny, but noted that several major issues, including competition rules and data privacy protections, are outside its remit.
In other news, Le Maire announced later on September 12 that France will tax cryptocurrency sales only when the are converted into fiat currency, Bloomberg Tax reported.
“We believe that the moment the gains are converted into traditional money is the right time to assess tax,” said Le Maire.
Likewise, the value-added tax (VAT) will be levied when a digital currency is used to purchase assets or services, he said.
Updated September 12, 2019, at 1:35 p.m. to add cryptocurrency tax news.
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