RBA puts the brakes on Facebook’s cryptocurrency plans for Australia

Following a submission to the senate, the Reserve Bank of Australia (RBA) has expressed its concerns over social media giant, Facebook’s planned cryptocurrency, Libra.

The RBA expressed concerns over the current risks and regulations of stablecoins such as Libra, stating in the submission, “Libra has prompted regulators globally to closely consider the potential risks and benefits of cryptocurrencies, with a particular focus on stablecoins with the potential to operate on a global scale.”

In the report the RBA stated that it is supportive of the G7’s (Group of Seven) view that global stablecoins could be, “more efficient and inclusive than existing payment methods, particularly for cross-border payments.” But also agreed with the G7’s suggestion that, “such proposals raise significant legal and regulatory risks, including to consumer/investor protection, data privacy, monetary policy, and financial stability.”

What is Facebook Libra?

If you haven’t been keeping up with the latest cryptocurrency news, you might be wondering what actually is Libra? Well Libra is the blockchain digital currency proposed by Facebook. Specifically Libra is a stablecoin; a type of cryptocurrency where the stablecoin itself is supposedly less volatile, as it is linked to an actual stable asset.

Backers for Facebook’s new venture include big names such as Uber, Spotify and Vodafone. Although it should be noted that other global companies including PayPal, eBay, Mastercard and Visa all pulled out of the Libra Association following regulatory concerns expressed at the US senate meetings. 

Concerns shared by the RBA, who stated, “a key consideration for regulators is to ensure that private sector stablecoin initiatives operate under a comparable regulatory regime to existing payment systems, and in particular, that they do not fall outside the existing regulatory framework.”

But besides questions of regulations and security, the Reserve Bank also seemed quite dismissive of the need for global stablecoins in Australia altogether. The report states “Australia is already well served by a range of low-cost and efficient real time payment methods, such as the NPP.” That’s the New Payments Platform, founded in 2013.

So while the dream of breaking into Australia’s cryptocurrency market market may not be completely over for the social media giant, only time will tell what regulations may be put in place, or whether Libra will ever see the light of day Down Under.