Facebook faces backlash over Libra cryptocurrency
A group of international regulators is calling on Facebook and the group of companies behind the launch of a new digital cryptocurrency, Libra, to provide more clarity about how it will handle data protection
6 Aug 2019
A statement to Facebook and 28 other companies behind the launch of the Libra project has asked the multinational tech giant to provide details of how customers’ personal data will be processed in line with data protection laws.
It asks for assurances that only the minimum required data will be collected, that the service will be transparent, and requests details of how data will be shared between Libra Network members.
Facebook announced plans in June to move into the cryptocurrency market with the launch of Libra, a new global currency powered by blockchain technology, which will be available as a payment method on WhatsApp and Messenger.
Since the announcement, the company has come in for criticism over the proposals with warnings about the lack of a global regulatory framework for cryptocurrency.
The latest group to voice concern is leading data protection authorities from around the world, including the Information Commissioner’s Office (ICO) in the UK, which are demanding more clarity about the data protection handling proposals for Libra.
‘We are joining together to express our shared concerns about the privacy risks posed by the Libra digital currency and infrastructure. Other authorities and democratic lawmakers have expressed concerns about this initiative. These risks are not limited to financial privacy, since the involvement of Facebook Inc, and its expansive categories of data collection on hundreds of millions of users, raises additional concerns,’ the group warned in a statement.
‘This combination of vast reserves of personal information with financial information and cryptocurrency amplifies our privacy concerns about the Libra Network’s design and data sharing arrangements.’
The statement was signed by a cross section of authorities representing millions of people in Europe, Americas, Africa and Australasia. These include the UK’s Information Commissioner Elizabeth Denham and her counterparts in Australia, the US, Canada and the EU’s European Data Protection Supervisor.
Denham said: ‘The ambition and scope of the Libra project has the potential to change the online payment landscape, and to offer benefits to consumers. But that ambition must work in tandem with people’s privacy expectations and rights.
‘Facebook’s involvement is particularly significant, as there is the potential to combine Facebook’s vast reserves of personal information with financial information and cryptocurrency, amplifying privacy concerns about the network’s design and data sharing arrangements.
‘We know that the Libra Network has already opened dialogue with many financial regulators on how it intends to comply with financial services product rules. However, given the rapid plans for Libra and Calibra, we are concerned that there is little detail available about the information handling practices that will be in place to secure and protect personal information.’
Last month, G7 finance ministers warned of the risks of the lack of global regulatory oversight of cryptocurrency, highlighed concerns about Facebook’s new Libra cryptocurrency, saying that ‘stable coins’ and other financial products being developed by tech companies to work as global currencies raised ‘serious regulatory and systemic concerns’.
Dante Disparte, head of policy and communications at Libra Association, which is the non-profit behind the Libra launch, said: ‘We appreciate these thoughtful questions and share the commitment to protecting personal information. As much as Libra represents an opportunity for the world to make inroads on financial inclusion, we acknowledge the need to design an infrastructure that complies with global privacy requirements.’
Sara White | 06-08-2019