I'm not sure France and Germany fully get what they are trying to ban exactly. Most politicians only have a very rudimentary understanding of this stuff and probably lots of misconceptions.
Libra is several things; most of which already exist in other forms in the EU. That makes it hard to block as a whole. At least not without also impacting a lot of other companies and people doing similar things because the law should apply equally to all.
First of all, it's a permissive blockchain similar to e.g. Ripple and Stellar, both of which are used by companies in the EU; some of which are fintech companies actively collaborating with the German, French and other governments. Some of the coins on these platforms are stable coins for euros, dollars and other coins. Some of them represent bonds (e.g. a German company called Bitbond) and some of them of them are new coins. Some EU companies even offer credit cards backed by crypto currencies (e.g. Wirex is based in the UK and offers it's products to people in Germany and elsewhere).
Then there is the notion that quite a lot of EU citizens own and actively trade in bitcoin, eth, and a wide variety of other coins already. Why would a Libra coin be any different just because Facebook is behind it? The scope of what they can ban here under existing laws seems unclear. Making new laws takes ages and has so far not really happened. Most blockchain companies operate under interpretations of the existing laws. My guess is that market making for Libra like Facebook is planning would probably be subject to regulation and also be problematic in many other countries (like the US).
Then there is Move, the language used for implementing smart contracts in Libra. That too already exists in the EU market in the form of loads of companies doing all sorts of things on top of mainly Ethereum and using Solidity, which is technically similar. You can argue about how useful these things are but there is a lot of investment happening in startups doing things with block chains and smart contract. A lot of that is happening with permission of the relevant authorities. E.g Bitbond was approved by the German Bafin.
So, singling out Facebook to do any of those things does not sound like it would be very practical from a legal point of view.
What they can do is take action if Facebook starts promoting and trading it's own currency within Facebook which I'm guessing would require a bank license or at least expose them to financial regulation.
My guess is that Facebook will instead launch Libra with a simple stable coin backed by euros and dollars and post pone launching their own coin. This would make it more similar to what e.g. Apple Pay and Android Pay enable: a simple online wallet that users may use for paying for things online. The fact that there's a blockchain involved is maybe technically interesting but not necessarily a problem. I'm guessing they'll also be exploring using smart contracts for a few things. Facebook as a payment provider would of course be subject to the same kind of rules that Apple, Google, and others have to deal with.
A further complication might be that Facebook is isolating Libra into a separate foundation. That might shield them legally and allow them to push some boundaries. One thing they might eventually do is launch Libra the coin only in certain markets. They were talking a lot about third world countries in the original announcement.
> without also impacting a lot of other companies and people doing similar things because the law should apply equally to all.
Other blockchains have not been blocked outright because they don't pose a threat and are developing slowly, so EU countries are working towards more or less sensible regulations. Facebook has far more power to drive adoption, so in order to avoid a situation where Facebook screws up (intentionally or unintentionally) they block the currency preemptively.
> quite a lot of EU citizens own and actively trade in bitcoin, eth, and a wide variety of other coins already
Relatively, not that many. Also, those currencies are being mostly used as investments, not currency.
> Why would a Libra coin be any different just because Facebook is behind it?
Precisely because Facebook is behind it: a foreign company, known to bypass and ignore regulations, with interests that do not necessarily align with those of the citizens, and with zero accountability.
> startups doing things with block chains and smart contract.
As long as it is not a global currency owned by private corporations it's ok.
> This would make it more similar to what e.g. Apple Pay and Android Pay enable
A different coin is very different from Apple and Android Pay. Payment systems are very different from coins.
Maybe but I'm just making the point that Facebook has plenty of ways to use most or all of what they announced regarding Libra to basically meet their stated goal of providing a wallet feature to users that would basically amount to them doing very similar/identical things as other companies already do and would be quite hard to ban for that same reason. The reason I bring up payment solutions is because that is literally the primary usecase for Libra. A wallet type feature with some sort of blockchain based euro or dollar tokens should be completely fine under existing laws. Several companies do that already in the EU.
France and Germany are being quite vague about what exactly they will block, what the scope is of that, or even how they imagine this would work. Also, Facebook itself has not been very clear about their actual intentions or those of the Libra legal entity that is supposedly governing all of this. Depending on how you read their announcements, Libra the coin might be considered as an experimental/optional part of an overall solution or vision that could also involve euro/dollar tokens (just like others trade on Stellar, Ripple, etc.).
Of course FB has ways to use most of what they announced with Libra and most of that would be fine. The problem with Libra is its core, the fact that it's an alternative currency backed by a company that can reach almost everybody. Other companies develop other coins but they do not have the influence FB has and so it gives legislators time to regulate it.
Sovereign monetary policy goes out the window if Libra takes a serious hold in society. The only solution to that is a decisive ban on it.
This sounds suspiciously like the “we are too smart for you to regulate us” argument.
When reading a lot of these arguments, a lot of them seem to me to be very “white box” defending the end result against legislation by arguing about the internal implementation.
Facebook is creating a financial instrument. I’m a bit surprised regulators couldn’t use _existing_ legislation to prevent them from using it in a country.
Facebook is creating a technical platform very similar to other platforms already in use that enables many things; most of which are neither new nor illegal.
The financial instrument part of it is getting all the attention here even though it's hardly essential to Libra (the platform as a whole). That too is not new and they'd have to apply existing legislation in a way that is consistent with how they are already applying it.
That's the key point. Failing to do that would create a lot of problems; which automatically translates into court cases and judges deciding on what is the correct way to do this rather than politicians. That will take many years. Existing legislation is the only legislation that matters because creating new laws or emergency laws would be very hard; especially considering that nobody seems to agree on what should actually be in those laws.
So we're getting a vague "we don't like that sort of thing" in response to a deliberately vague press release a few months ago that wasn't being very specific on a lot of things. It's a political statement not actually backed up by concrete plans to change legislation or instruct authorities to interpret it in a certain way. It's a hollow threat.
Of course you have to see this in the context of the bigger picture of tax dodging and privacy violations associated with big US tech companies operating in Europe and the public pressure to do something about that. That's what this is. Political posturing.
Libra is several things; most of which already exist in other forms in the EU. That makes it hard to block as a whole. At least not without also impacting a lot of other companies and people doing similar things because the law should apply equally to all.
First of all, it's a permissive blockchain similar to e.g. Ripple and Stellar, both of which are used by companies in the EU; some of which are fintech companies actively collaborating with the German, French and other governments. Some of the coins on these platforms are stable coins for euros, dollars and other coins. Some of them represent bonds (e.g. a German company called Bitbond) and some of them of them are new coins. Some EU companies even offer credit cards backed by crypto currencies (e.g. Wirex is based in the UK and offers it's products to people in Germany and elsewhere).
Then there is the notion that quite a lot of EU citizens own and actively trade in bitcoin, eth, and a wide variety of other coins already. Why would a Libra coin be any different just because Facebook is behind it? The scope of what they can ban here under existing laws seems unclear. Making new laws takes ages and has so far not really happened. Most blockchain companies operate under interpretations of the existing laws. My guess is that market making for Libra like Facebook is planning would probably be subject to regulation and also be problematic in many other countries (like the US).
Then there is Move, the language used for implementing smart contracts in Libra. That too already exists in the EU market in the form of loads of companies doing all sorts of things on top of mainly Ethereum and using Solidity, which is technically similar. You can argue about how useful these things are but there is a lot of investment happening in startups doing things with block chains and smart contract. A lot of that is happening with permission of the relevant authorities. E.g Bitbond was approved by the German Bafin.
So, singling out Facebook to do any of those things does not sound like it would be very practical from a legal point of view.
What they can do is take action if Facebook starts promoting and trading it's own currency within Facebook which I'm guessing would require a bank license or at least expose them to financial regulation.
My guess is that Facebook will instead launch Libra with a simple stable coin backed by euros and dollars and post pone launching their own coin. This would make it more similar to what e.g. Apple Pay and Android Pay enable: a simple online wallet that users may use for paying for things online. The fact that there's a blockchain involved is maybe technically interesting but not necessarily a problem. I'm guessing they'll also be exploring using smart contracts for a few things. Facebook as a payment provider would of course be subject to the same kind of rules that Apple, Google, and others have to deal with.
A further complication might be that Facebook is isolating Libra into a separate foundation. That might shield them legally and allow them to push some boundaries. One thing they might eventually do is launch Libra the coin only in certain markets. They were talking a lot about third world countries in the original announcement.