Amid constant scrutiny from U.S. regulators and lawmakers, it appears that Facebook's Libra will also have a hard time entering China.
An official with China's State Administration of Foreign Exchange (SAFE) believes the cryptocurrency should be supervised if it is allowed entry into the Chinese financial market.
According to the Global Times, lawmakers and regulators in China are still holding early talks regarding the safety of Facebook's proposed cryptocurrency. Chief Accountant of SAFE, Sun Tianqi, said that if Libra is not considered as a foreign currency, it "should be prohibited."
Sun went on to question who will intervene between transactions using Libra as a digital currency. Since the cryptocurrency is tagged as a "consumer-to-consumer currency" under technological terms, Sun believes Facebook should provide details about who will intervene to ensure that the transactions are safe for all parties involved.
While Sun believes that Libra can possibly be used in the Chinese financial sector if it is recognized as a foreign currency, other analysts think there's more work to be done outside the type of currency where Libra should be categorized in.
Chief Economist of Industrial Bank Corp., Lu Zhengwei, noted that since foreign currencies have "high convertibility around the world," China should hold talks first regarding the capacity of Facebook's digital money to be even considered as a currency.
"It is clear that Libra should be under supervision if it enters China," Lu stressed, echoing the sentiments of other global lawmakers and regulators regarding the Calibra project's potential risks to the existing banking system.
Meanwhile, Facebook has informed investors in the Calibra project that the digital currency may not see the light of day due to the increased criticism from regulators and lawmakers.
Late last month, the social media giant wrote to investors, setting the expectations right. Facebook explained that due to the scrutiny over the proposed digital currency, the supposed launch in 2020 may or may not happen.
The company also acknowledged that in terms of experience, the social media platform does not have a lot to brag about cryptocurrency projects. The lack of experience has also been the center of concern for some industry experts.
Facebook has yet to confirm whether it will pursue the Libra cryptocurrency's launch next year. The project has yet to receive a highly-elusive approval from the White House.
Should the Calibra project be approved sometime in the future, Libra can be used by just about anybody using the platform - whether or not the user is banked. The company believes this new cryptocurrency can help ease the burdens of people who want to transact online.
