Oz Regulators Tipped To Request Facebook Probe
Eight Australian regulators are reportedly expected to force a probe into Facebook after the social media company failed to reassure officials regarding the threat its global cryptocurrency platform Libra could have on national security, banking, consumers and investors.
As reported by The Australian, the regulators in question include the Australian Securities & Investments Commission, the Office of the Australian Information Commissioner, anti-money-laundering regulator Austrac and the Australian Competition & Consumer Commission.
The group of eight regulators was prompted to use their own ‘formal powers’ to probe Facebook following the breakdown of meetings between company officials and senior watchdog members.
Phone scamming is being highlighted as the primary concern of the group, which could increase privacy fears and make law enforcement more difficult with the possibility of money laundering facilitated through the cryptocurrency platform.
A heavily redacted document obtained by The Australian reveals ASIC’s ’emerging threat and harm committee’ met on July 31 to discuss ‘the potential disruption to Australian financial markets posed by the Libra crypto-asset and ecosystem’.
The corporate watchdog discussed consumer vulnerability to Libra due to the ‘high penetration of Facebook-owned apps’ including Instagram.
This could be especially concerning with the rise of spending through social media apps, including a reported increase in impulse purchases.
‘The proposed Libra ecosystem also poses many risks and threats, including the proliferation of scams based on Libra via mobile apps’ the document read, with ASIC expected to identify more risk and threats once more information is gathered.
Facebook currently has 15 million active users in Australia, with eight million active on Instagram and another five million on WhatsApp.
OAIC deputy commissioner Elizabeth Hampton said if Facebook does not adequately answer regulator concerns, formal powers will need to be considered for independent use rather than in concert.
These questions include the structure of the cryptocurrency, the launch timeframe, privacy and consumer protection, compliance with money-laundering and terrorism-financing laws and competition issues.
A spokesperson for the OAIC highlighted concerns that Facebook and Libra have only made statements regarding privacy, omitting to address information about handling practices that will be implemented to ‘secure and protect personal information’.
Facebook claimed it was committed to ‘taking the time to get this right’ since the beginning of the project, and ‘will continue to be a part of the dialogue to ensure that this global financial infrastructure is governed in a way that is reflective of the people it serves’.
However two days out from the first meeting with Facebook and Libra execs the US Federal Reserve chairman Jerome Powell had said Facebook’s plan to build a digital currency called Libra could not proceed until the company addressed severe concerns.
While the same can not be technically said in Australia, ASIC did state discussions are ‘still at a relatively early stage’ though one way or another, Facebook and Libra will need to have its answers ready or risk failing altogether.
Though according to a recent paper on digital currencies by the US National Bureau of Economic Research, a currency crisis is ‘nothing new’.
‘The history of money … suggests that there will always be a demand for a non-state currency that serves as a check on the inflationary monetary tendencies of the sovereign. Should that demand persist, it is likely that some private decentralised digital currency will continue to exist.’