“Hey, I will messenger you 20 Libras for the dinner” may very soon be what people say after meals in the near future.
Libra, the latest cryptocurrency to be released by Facebook, is under intense scrutiny on its potential to become a worthy challenger of sovereign currencies like the US Dollar or British Pound.
In the latest US Congress hearing, Senator Sherrod Brown of Ohio slammed Facebook for its “breathtaking arrogance” in attempting to launch Libra after multiple privacy breaches last year.
Ever since the rise of Bitcoin, new crypto coins seem to come into the market every year, why the fuss about Libra?
Most of the existing cryptocurrencies lack serious penetration into people’s everyday lives. Certain tech know-how is required before you can start owning and trading them. When not enough people use digital wallets, Bitcoin and others will remain a hobby instead of a replacement for traditional currency.
However, the crypto entry barrier will become a non-issue if the currency is established on an App that everyone has on mobile — Facebook. What’s more, with more than 2 billion daily active users, Facebook has the capacity to provide the unbanked population — people who have no bank accounts — the financial benefits of having a Libra account. Namely, Libra users can easily transfer the coins they hold and have access to micro-loans.
This, of course, threatens financial regulators in most countries. US Federal Reserve Chairman Jerome Powell testified before Congress that the Fed had "serious concerns" about how Libra would deal with "money laundering, consumer protection, and financial stability."
The concept of a globally available and accepted cryptocurrency like Libra is too bold at the moment. Facebook Executive David Marcus acknowledged this issue on the hearing floor and said, “We know we need to take time to get this right,” reassuring that Facebook will not begin offering Libra until the regulatory issues are addressed.
One thing is clear from the hearing exchange: Libra is on the cusp of being launched, and when it does, it will launch globally. Although the Libra Association is headquartered in Geneva, it is up to each country’s regulators to come up with the rules by which the circulation of Libra should be governed within their borders.
How will Libra fare under the existing anti-money laundering, banking, and privacy laws? Financial regulatory agencies around the globe will probably scratch their heads while drafting up regulatory terms.
And it is paramount that Taiwan also braces for the Libra launch at this stage.
When it comes to regulating new technology, Taiwan has been among the slowest to adapt.
Uber has just been banned, the second time, since coming to Taiwan in 2016. A legal tech startup Law Call (呼叫律師), ambitious to become the “Uber for lawyers” in Taiwan, was driven out of business because the lawyers’ union disapproved such a platform to “advertise legal service.” CherryPay, a money transfer service that had won Singapore’s Startupbootcamp competition, was shut down and its founders were indicted for violating banking regulations.
An island proud to call itself the “Island of Technology,” Taiwan needs to wipe the slate clean and focus on systematically revamping its laws and regulations to fit such an image. The Taiwanese government needs to throw away the mindset of creating a “sandbox” environment — a regulatory safe haven for startups to initiate its operations but at the same time restrictive of its potential growth. No serious startup founders and investors would ever put capital in a country just to grow inside a sandbox.
Taiwan’s entire laws, regulations, and even the government structure need a major overhaul to encourage more local and international startups to look seriously at Taiwan as a place to invest and innovate. The legislators have to adapt to the ideas that new technologies are constantly changing and the laws they make will need to leave room for rapid changes. Only after the legal hurdles are removed will investors start putting money into creative solutions to improve people’s lives.
Hence Libra offers an opportunity for Taiwan to show initiative to kickstart this process. No more kicking the can down the road, waiting until Libra wallets start landing in Taiwanese consumer’s pockets.
The time to catch the Libra regulation bandwagon is now.
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TNL Editor: Daphne K. Lee (@thenewslensintl)
