Consumer Advocacy Groups Criticize Facebook's Cryptocurrency -- But Miss Its Potential "Vice Coin" Problem for the Poor

Not surprising, but this backlash is surprisingly thorough -- two weeks after Facebook announced its plan to launch a cryptocurrency called Libra, dozens of advocacy groups are calling on Congress to delay and scrutinize its plans:

In their letter to leaders of five congressional committees, organizations including the Service Employees International Union, the Consumer Federation of America and Public Citizen argued that regulators aren’t prepared to address issues surrounding the Libra project and that the social-networking giant needs to present a fuller picture of its plans.

“All of us believe the risks posed by Facebook’s proposal are too great to allow the plan to proceed with so many unanswered questions,” the groups said. Their demand echoes House Financial Services Committee Chairwoman Maxine Waters’ earlier call for lawmakers to impose a moratorium and may set the tone for this month’s congressional hearings on the issue.

You can read the letter (.pdf warning) here, which raises many good points. One concern I don't see raised: How the Libra project's lofty rhetoric of giving the poor and unbanked of the world a financial resource will probably run up against the harsh reality of how Libra will actually (probably) be used for, at least to start. As I wrote:

The industries with the greatest incentive to use Libra now are on the edge of the mainstream economy -- for instance, gambling, online gaming, porn, and the burgeoning legal pot industry in some US states. In my view, their rapid embrace will likely turn Libra into "Vice Coin" -- a brand association which might hamper Libra's adoption by the wider mainstream... [So] that'll be Libra's challenge -- trying to scale it to the mainstream while the early adopters are likely porn/gambling/gaming which will totally undermine all the bright and happy utopian imagery in its ads.

And because Libra is in a nebulous regulatory state, it might wind up becoming only popular with industries like that. Leaving any poor, unbanked of the world who convert their meager savings to Libra, in an even more problematic state -- unable to cash out their Libra for essential goods and services.

Comments

[Susan Wilson]

Bah, the poor can just use Tilia :) Zuck & company couldn't care less about them anyway.

[sirhc desantis]

I'll give 2 Zucks per Libra but offer ends... oh dear already passed.

[Susan Wilson]

The most hilarious part to me is how they present all these corporate logos as if that was supposed to give us confidence. Big corporations are the least trustworthy entities in our world.