French Finance Minister Says Facebook Cryptocurrency "Must Not Happen"

The Facebook unveiling of its cryptocurrency on Tuesday wasn’t met with all smiles. French Finance Minister Bruno Le Maire said during a radio interview that the social media giant’s latest foray into digital currencies “must not happen.”

Le Maire further said it was “out of the question” that Facebook’s cryptocurrency would eventually become a “sovereign currency.” The Group of Seven (G-7) collective that includes France, the U.K. and U.S. is looking to set up a forum that will delve deeper into the risks of digital currencies and their impact on the current financial system under fiat currency.

Cryptocurrencies are riding the wave of positive news stemming from social media giant Facebook unveiling its cryptocurrency payment plan on Tuesday. Dubbed “Project Libra,” the digital currency will feature partnerships with Visa and Mastercard.

The Facebook cryptocurrency news is setting the space abuzz with optimism as Bitcoin reached a high of $20,000 near the end of 2017 and fell over 70 percent since, but is climbing back to prominence again following this news. Despite pressure from governmental regulators for privacy issues, analysts are expecting this cryptocurrency offering will bolster Facebook’s profile.

Leading cryptocurrency Bitcoin recently crossed the $9,000 mark for the first time since May 2018 amid the hype over social media giant Facebook and its latest cryptocurrency offering.

A year ago, the plan for Facebook to roll out its own form of cryptocurrency was set in motion when the company appointed former PayPal executive David Marcus to begin exploring the opportunity. Since then, rumors swirled that Facebook was developing its own digital currency that would allow its users to store, trade, and exchange for regular currency via apps like Messenger and WhatsApp.

Facebook CEO Mark Zuckerberg was already hinting that new ventures like cryptocurrency would help diversify the company’s revenue streams, which relies heavily on advertising.

Analysts Respond with Optimism

While LeMaire denigrated Facebook’s cryptocurrency, analysts in the U.S. were raving about it.

“With more than 2.5 billion users, Facebook and its partners could be a significant endorsement of cryptocurrency and a notable addition to the Facebook app ecosystem,” Bank of America said. “Although many questions remain on ease of use and potential adoption as there are very viable online payment alternatives in place, the consortium will likely get significant press/visibility and could be a medium-term catalyst for eCommerce activity on Facebook. We see the launch as an important initiative for the company as it builds out a more private messaging ecosystem with eCommerce capabilities.”

“We believe a Facebook cryptocurrency-based payments system could be especially useful in countries with high inflation/unstable banking systems and for cross-country remittances,” MoffettNathanson said. “So, Facebook’s commerce ambitions do not appear to be limited to developed markets. Rather, Facebook has its eyes set on becoming the world’s leading ecommerce platform as well.”

“We believe this may prove to be one of the most important initiatives in the history of the company to unlock new engagement and revenue streams,” RBC analysts Mark Mahaney and Zachary Schwartzman said in a note Thursday evening.

“We believe Facebook will use crypto to facilitate a platform for: 1) Payments; 2) Commerce; and 3) Applications & Gaming,” Mahaney and Schwartzman said.

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