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If Facebook attempts to become a money transfer service or bank without the required licensing, they will have their offices raided and their doors locked on th

If Facebook attempts to become a money transfer service or bank without the required licensing, they will have their offices raided and their doors locked on them. This is something Governments don't tend to mess around with.

nikanj 7y ago
FB is banking (pun unnintended) on the regulators and goverments being absolutely useless lately. Both AirBnB and Uber built empires on ”What if we just ignore the rules”
- delecti 7y ago
  AirBnB and Uber just kinda did it first and then asked permission. Facebook's only tiny hope of that strategy working was to announce Libra as being available first, not announcing the plan to governments first. Plus, taxi and hotel regulations are a very different situation than laws intended to prevent international money laundering, tax evasion, sanction breaking, or black market economies.
  - deleted 7y ago
    [deleted]
- Rapzid 7y ago
  Both AirBnB and Uber had the benefit of governments that generally wanted to try to work something out with them.
- JumpCrisscross 7y ago
  > Both AirBnB and Uber built empires on ”What if we just ignore the rules“ Municipal regulations. Not federal and state laws with criminal penalties. Wilfully breaching AML statute is arson to Uber’s parking tickets.
  - wpietri 7y ago
    Exactly. Municipal regulators were unprepared for somebody with a billion dollars willfully breaking laws. And the laws were not a huge deal. For financial regulators, it's their bread and butter, and the laws are most definitely a big deal. Money laundering is a problem they are very serious about because it enables so much other crime. I'm sure Facebook would not be dumb enough to step in front of that train, but if they did, it would run them flat. There's also a sort of 9/11 effect going on here. The reason the 9/11 hijackers pulled it off was that nobody expected them to use the planes as giant suicide bombs. Previous hijackings generally ended peacefully, so everybody just stayed chill. But that window of opportunity expired before they managed to crash the 4th plane. Now nobody's just going to sit quietly through a hijacking. Similarly, I think the reason Uber and Airbnb got away with so much lawbreaking is that it was novel to have nominally respectable companies blatantly committing a wide variety of crimes. But these days, tech companies get a lot of suspicion. Regulators are not interesting in getting caught flat-footed again. And that was true 5 years ago; SF vigorously shut down a bunch of entrepreneurs that wanted to sell public parking spaces back to the public: https://www.govtech.com/transportation/SF-Demands-MonkeyParking-App-Stop-Auctioning-Spaces.html https://www.govtech.com/transportation/SF-Demands-MonkeyPark...
- jklein11 7y ago
  The difference is that Airbnb and Uber has a lot less to lose. If they got shut down by the govt they could just lose some VCs money. Facebook has a lot more on the line.
  - adventured 7y ago
    Further to that point, Airbnb and Uber are primarily dealing with issues related to local laws, for example in New York City or San Francisco. New York City shutting down Airbnb doesn't shut them down in the thousands of other cities they're active in. If Boise Idaho restricts Uber, that doesn't suddenly restrict them in Chicago. The US Government has an entirely different kind of power and when it comes to protecting the global reserve currency, the one guarantee is that they will use it.
- toast0 7y ago
  The feds can come and shut down all of FB over money transmittal, they don't have to limit the shutdown to only the money parts. That's a huge risk to take. If Uber was shut down for violating taxi rules, they only had an unlicensed taxi business.
  - oceanplexian 7y ago
    Is this the same feds who all have Facebook accounts, including their families, children, relatives, bosses, and so on? Including everything they buy, everything they look at, their location, and complete profiles of their personality, photos, photos that were taken OF them by other people, likes and dislikes, dirty secrets, and so on? It sure would be a shame if FBI directors in charge of such an investigation were cheating on their wives or were illegally getting kickbacks from contractors. Would be absolutely inconceivable that Facebook might even leak that information to their friends at the CIA or NSA and call in a favor.
    - mypalmike 7y ago
      Spy novels are a hell of a drug.
    - bpt3 7y ago
      No one actually doing any of the things you imagined (if they exist) is dumb enough to talk about it on a third party site.
  - mminer237 7y ago
    Could they? Wouldn't Facebook would only be an investor and Libra would be a separate company?
    - SiempreViernes 7y ago
      Seems hard to have any prominent integration without having libra related infrastructure on fb servers, and all infra with ”libra” on it is likely to get seized in a raid. But sure, if libra is just an altcoin on unrelated hardware then fb won’t be affected.
- axaxs 7y ago
  This is not a smart position to hold. This administration hates big tech (perhaps fairly, lets not debate politics) and Warren isn't much friendlier.
- kyle_v 7y ago
  But airbnb and uber were at a stage where they didn't have much to lose when they first challenged these regulations. Facebook is one of the most well known companies in the world.
- oaiey 7y ago
  Money is the fabric of our economic system for thousands of years. Taxis and accommodation are just tiny services build on that fabric. Facebook is dealing with different powers here.
- Mirioron 7y ago
  FB is going to find useless regulators and governments though. FB is a global company. What's the chance that every country in the world is on top of their game?
  - nieve 7y ago
    The US cares about money laundering by US entities abroad as well and there's no get out of jail free card for "well, the other guys said it was okay". On top of that one of their selling points is how universal and frictionless it's supposed to be. If they can only operate in countries with useless regulation they're kind of doomed on that.
krn 7y ago
Wouldn't Facebook just get something like the UK's Electronic Money license? That's how TransferWise operates without being a bank.
- vertex-four 7y ago
  Even if the regulators let them get away with that, nobody in Europe is particularly in need of a cryptocurrency for moving money around Europe, we have near-instant money transfers for free (or close to it) through our banks. I guess they could go for the remittances market, but that's really not where I see Facebook wanting to go.
  - krn 7y ago
    Well, I still think that email is good enough medium for personal communication, but most of the people I know have replaced it with Messenger. The same might happen with money transfers, if Messenger becomes another WeChat, just outside of China. From the legal perspective, could Facebook be like Coinbase, but with a single currency?
    - oneplane 7y ago
      Messenger isn't all that popular outside of north america. Doesn't matter how much money transfer options you add to a program if nobody is using it. I do wonder what happens if any non WeChat thing starts going for banking type functionality (legal or not).
      - TheSpiceIsLife 7y ago
        Multiple search results lead me to believe Facebook Messenger is the second most popular messaging app after WhatsApp. Are you able to provide references supporting your claim?
        oneplane 7y ago
        Sure but you could plug that into google as well you know. Here is the first hit: https://www.messengerpeople.com/global-messenger-usage-statistics/ https://www.messengerpeople.com/global-messenger-usage-stati... Edit: oddly enough, that hit wasn't the one where I read about it last week... But any page with sources works I suppose.
jameslevy 7y ago
My understanding is that they are limiting the relationship between Facebook as a corporate entity and Libra, at least on paper. Whether regulators treat it this way is another matter. But FB must be spending a lot on lobbying, and that should help them avoid any major surprises regarding enforcement actions.
- markdown 7y ago
  > But FB must be spending a lot on lobbying That only helps them in countries like the US where bribery is legal.
  - freeopinion 7y ago
    Why wouldn't it help in countries where bribery is illegal?
    - kbenson 7y ago
      The insinuation is that lobbying is bribery (and on the more egregious end of the spectrum, it is). In countries where lobbying isn't legal, it would at least help much less.
      - egman_ekki 7y ago
        I think the idea is that if lobbying is legal, then it is regulated and thus how much it can help is limited. In countries where lobbying is illegal, it can take a form of bribery and then you can (potentially) achieve a bit more in this 'unregulated-bribe-anyone' space...
        markdown 7y ago
        That's an odd argument. If the goal is not to have your politicians be bought and paid for, then surely making it legal to buy them is arse backwards.
- goatinaboat 7y ago
Shivetya 7y ago
which is more the reason to support them in creating such currencies. a private currency provider would open up freedom to so many people that it is only natural for governments, read : politicians, to prosecute such attempts directly and indirectly. they lost control of the message so they damn well make sure they don't lose control of the purse strings by any means necessary. (by message I mean the internet has foiled politicians pretty much using "trusted" organizations as mouth pieces and revealed many for who they are and also prevented scandals and whistle blower stories from being buried or turned)
- theamk 7y ago
  I don’t think you should use “facebook” and “freedom” in the same sentence.. unless you mean “freedom to ban anyone for life for any reason without any oversight”
csomar 7y ago
Except that 1. Same has been said of Bitcoin, and yet the government kinda embraced it. 2. Facebook is not making Libra. It is a non-profit based in Switzerland. 3. Libra is backed by USD-EUR-JPY and the related countries might turn a blind eye because of that.
- eternalban 7y ago
  You forgot to add that many of us suspect Google and Facebook are outsourced DoD projects.
  - opportune 7y ago
    That would be the best kept secret of all time
    - dboreham 7y ago
      In the beginning...1993 or so, before Altavista, everyone I knew doing web search came from TLA contractors where they had been long working on similar projects.
- not-satoshi 7y ago
  1. Where are Bitcoin's offices?
  - csomar 7y ago
    Bitcoin mining is actually quite centralized in a few players; and the exchanges have established offices. The gov.s could have done some serious damage. edit: nice try Satoshi!
    - therein 7y ago
      So what you're saying is we will go raid unrelated folks? Where would you stop, would you also seize assets of people running non-mining nodes?
aclsid 7y ago
The licensing is not the issue. It is the middleman charging fees for simple transactions that they will totally skip. Building that before was hard but the blockchain solved that
- FillardMillmore 7y ago
  I think you're right on the money (no pun intended). The technology is there. If government doesn't get in the way (which they will), market forces would dictate that a company (Facebook or other) would use this technology (Blockchain) to make these sort of transactions more efficient and cost-effective for everyone willing to adopt them.
  - rrdharan 7y ago
    A distributed ledger is not more efficient than a centralized ledger. You give up efficiency in exchange for distributing the trust.
- tim333 7y ago
  As far as I can see sending money with Libra would be quite similar to sending money with say Ethereum. Transfering ETH from one wallet to another is semi anonymous and cheap, like one US cent. However converting fiat to ETH or back at the other end costs in the tens of dollars and requires things like being videoed holding your passport for KYC and AML. It tends to take a few days to be approved. I think the KYC process costs companies like $40. So it's not a cheap or quick process if you include that stuff and fairly traceable compared to cash. Facebook may have an advantage on KYC as it already knows it's clients through their facebook activity and so may be able to get the costs lower which could be a competitive advantage there.
  - tjpnz 7y ago
    >Facebook may have an advantage on KYC as it already knows it's clients through their facebook activity and so may be able to get the costs lower which could be a competitive advantage there. What Facebook might know about someone is completely worthless when it comes to KYC. In the country I live there are even some government issued identity documents that won't cut it.
tim333 7y ago
I'm not sure legally they'd be much different to Coinbase (YC S12) selling you bitcoins.
deleted 7y ago
[deleted]
coachtrotz 7y ago
Facebook is licensed as a Money Transmitter under their Facebook Payments entity. Source: https://www.nmlsconsumeraccess.org/EntityDetails.aspx/COMPANY/918740 https://www.nmlsconsumeraccess.org/EntityDetails.aspx/COMPAN...

nikanj 7y ago

FB is banking (pun unnintended) on the regulators and goverments being absolutely useless lately. Both AirBnB and Uber built empires on ”What if we just ignore the rules”

delecti 7y ago
AirBnB and Uber just kinda did it first and then asked permission. Facebook's only tiny hope of that strategy working was to announce Libra as being available first, not announcing the plan to governments first. Plus, taxi and hotel regulations are a very different situation than laws intended to prevent international money laundering, tax evasion, sanction breaking, or black market economies.
- deleted 7y ago
  [deleted]
Rapzid 7y ago
Both AirBnB and Uber had the benefit of governments that generally wanted to try to work something out with them.
JumpCrisscross 7y ago
> Both AirBnB and Uber built empires on ”What if we just ignore the rules“ Municipal regulations. Not federal and state laws with criminal penalties. Wilfully breaching AML statute is arson to Uber’s parking tickets.
- wpietri 7y ago
  Exactly. Municipal regulators were unprepared for somebody with a billion dollars willfully breaking laws. And the laws were not a huge deal. For financial regulators, it's their bread and butter, and the laws are most definitely a big deal. Money laundering is a problem they are very serious about because it enables so much other crime. I'm sure Facebook would not be dumb enough to step in front of that train, but if they did, it would run them flat. There's also a sort of 9/11 effect going on here. The reason the 9/11 hijackers pulled it off was that nobody expected them to use the planes as giant suicide bombs. Previous hijackings generally ended peacefully, so everybody just stayed chill. But that window of opportunity expired before they managed to crash the 4th plane. Now nobody's just going to sit quietly through a hijacking. Similarly, I think the reason Uber and Airbnb got away with so much lawbreaking is that it was novel to have nominally respectable companies blatantly committing a wide variety of crimes. But these days, tech companies get a lot of suspicion. Regulators are not interesting in getting caught flat-footed again. And that was true 5 years ago; SF vigorously shut down a bunch of entrepreneurs that wanted to sell public parking spaces back to the public: https://www.govtech.com/transportation/SF-Demands-MonkeyParking-App-Stop-Auctioning-Spaces.html https://www.govtech.com/transportation/SF-Demands-MonkeyPark...
jklein11 7y ago
The difference is that Airbnb and Uber has a lot less to lose. If they got shut down by the govt they could just lose some VCs money. Facebook has a lot more on the line.
- adventured 7y ago
  Further to that point, Airbnb and Uber are primarily dealing with issues related to local laws, for example in New York City or San Francisco. New York City shutting down Airbnb doesn't shut them down in the thousands of other cities they're active in. If Boise Idaho restricts Uber, that doesn't suddenly restrict them in Chicago. The US Government has an entirely different kind of power and when it comes to protecting the global reserve currency, the one guarantee is that they will use it.
toast0 7y ago
The feds can come and shut down all of FB over money transmittal, they don't have to limit the shutdown to only the money parts. That's a huge risk to take. If Uber was shut down for violating taxi rules, they only had an unlicensed taxi business.
- oceanplexian 7y ago
  Is this the same feds who all have Facebook accounts, including their families, children, relatives, bosses, and so on? Including everything they buy, everything they look at, their location, and complete profiles of their personality, photos, photos that were taken OF them by other people, likes and dislikes, dirty secrets, and so on? It sure would be a shame if FBI directors in charge of such an investigation were cheating on their wives or were illegally getting kickbacks from contractors. Would be absolutely inconceivable that Facebook might even leak that information to their friends at the CIA or NSA and call in a favor.
  - mypalmike 7y ago
    Spy novels are a hell of a drug.
  - bpt3 7y ago
    No one actually doing any of the things you imagined (if they exist) is dumb enough to talk about it on a third party site.
- mminer237 7y ago
  Could they? Wouldn't Facebook would only be an investor and Libra would be a separate company?
  - SiempreViernes 7y ago
    Seems hard to have any prominent integration without having libra related infrastructure on fb servers, and all infra with ”libra” on it is likely to get seized in a raid. But sure, if libra is just an altcoin on unrelated hardware then fb won’t be affected.
axaxs 7y ago
This is not a smart position to hold. This administration hates big tech (perhaps fairly, lets not debate politics) and Warren isn't much friendlier.
kyle_v 7y ago
But airbnb and uber were at a stage where they didn't have much to lose when they first challenged these regulations. Facebook is one of the most well known companies in the world.
oaiey 7y ago
Money is the fabric of our economic system for thousands of years. Taxis and accommodation are just tiny services build on that fabric. Facebook is dealing with different powers here.
Mirioron 7y ago
FB is going to find useless regulators and governments though. FB is a global company. What's the chance that every country in the world is on top of their game?
- nieve 7y ago
  The US cares about money laundering by US entities abroad as well and there's no get out of jail free card for "well, the other guys said it was okay". On top of that one of their selling points is how universal and frictionless it's supposed to be. If they can only operate in countries with useless regulation they're kind of doomed on that.

krn 7y ago

Wouldn't Facebook just get something like the UK's Electronic Money license? That's how TransferWise operates without being a bank.

vertex-four 7y ago
Even if the regulators let them get away with that, nobody in Europe is particularly in need of a cryptocurrency for moving money around Europe, we have near-instant money transfers for free (or close to it) through our banks. I guess they could go for the remittances market, but that's really not where I see Facebook wanting to go.
- krn 7y ago
  Well, I still think that email is good enough medium for personal communication, but most of the people I know have replaced it with Messenger. The same might happen with money transfers, if Messenger becomes another WeChat, just outside of China. From the legal perspective, could Facebook be like Coinbase, but with a single currency?
  - oneplane 7y ago
    Messenger isn't all that popular outside of north america. Doesn't matter how much money transfer options you add to a program if nobody is using it. I do wonder what happens if any non WeChat thing starts going for banking type functionality (legal or not).
    - TheSpiceIsLife 7y ago
      Multiple search results lead me to believe Facebook Messenger is the second most popular messaging app after WhatsApp. Are you able to provide references supporting your claim?
      - oneplane 7y ago
        Sure but you could plug that into google as well you know. Here is the first hit: https://www.messengerpeople.com/global-messenger-usage-statistics/ https://www.messengerpeople.com/global-messenger-usage-stati... Edit: oddly enough, that hit wasn't the one where I read about it last week... But any page with sources works I suppose.

jameslevy 7y ago

My understanding is that they are limiting the relationship between Facebook as a corporate entity and Libra, at least on paper. Whether regulators treat it this way is another matter. But FB must be spending a lot on lobbying, and that should help them avoid any major surprises regarding enforcement actions.

markdown 7y ago
> But FB must be spending a lot on lobbying That only helps them in countries like the US where bribery is legal.
- freeopinion 7y ago
  Why wouldn't it help in countries where bribery is illegal?
  - kbenson 7y ago
    The insinuation is that lobbying is bribery (and on the more egregious end of the spectrum, it is). In countries where lobbying isn't legal, it would at least help much less.
    - egman_ekki 7y ago
      I think the idea is that if lobbying is legal, then it is regulated and thus how much it can help is limited. In countries where lobbying is illegal, it can take a form of bribery and then you can (potentially) achieve a bit more in this 'unregulated-bribe-anyone' space...
      - markdown 7y ago
        That's an odd argument. If the goal is not to have your politicians be bought and paid for, then surely making it legal to buy them is arse backwards.
goatinaboat 7y ago

Shivetya 7y ago

which is more the reason to support them in creating such currencies. a private currency provider would open up freedom to so many people that it is only natural for governments, read : politicians, to prosecute such attempts directly and indirectly. they lost control of the message so they damn well make sure they don't lose control of the purse strings by any means necessary. (by message I mean the internet has foiled politicians pretty much using "trusted" organizations as mouth pieces and revealed many for who they are and also prevented scandals and whistle blower stories from being buried or turned)

theamk 7y ago
I don’t think you should use “facebook” and “freedom” in the same sentence.. unless you mean “freedom to ban anyone for life for any reason without any oversight”

csomar 7y ago

Except that 1. Same has been said of Bitcoin, and yet the government kinda embraced it. 2. Facebook is not making Libra. It is a non-profit based in Switzerland. 3. Libra is backed by USD-EUR-JPY and the related countries might turn a blind eye because of that.

eternalban 7y ago
You forgot to add that many of us suspect Google and Facebook are outsourced DoD projects.
- opportune 7y ago
  That would be the best kept secret of all time
  - dboreham 7y ago
    In the beginning...1993 or so, before Altavista, everyone I knew doing web search came from TLA contractors where they had been long working on similar projects.
not-satoshi 7y ago
1. Where are Bitcoin's offices?
- csomar 7y ago
  Bitcoin mining is actually quite centralized in a few players; and the exchanges have established offices. The gov.s could have done some serious damage. edit: nice try Satoshi!
  - therein 7y ago
    So what you're saying is we will go raid unrelated folks? Where would you stop, would you also seize assets of people running non-mining nodes?

aclsid 7y ago

The licensing is not the issue. It is the middleman charging fees for simple transactions that they will totally skip. Building that before was hard but the blockchain solved that

FillardMillmore 7y ago
I think you're right on the money (no pun intended). The technology is there. If government doesn't get in the way (which they will), market forces would dictate that a company (Facebook or other) would use this technology (Blockchain) to make these sort of transactions more efficient and cost-effective for everyone willing to adopt them.
- rrdharan 7y ago
  A distributed ledger is not more efficient than a centralized ledger. You give up efficiency in exchange for distributing the trust.
tim333 7y ago
As far as I can see sending money with Libra would be quite similar to sending money with say Ethereum. Transfering ETH from one wallet to another is semi anonymous and cheap, like one US cent. However converting fiat to ETH or back at the other end costs in the tens of dollars and requires things like being videoed holding your passport for KYC and AML. It tends to take a few days to be approved. I think the KYC process costs companies like $40. So it's not a cheap or quick process if you include that stuff and fairly traceable compared to cash. Facebook may have an advantage on KYC as it already knows it's clients through their facebook activity and so may be able to get the costs lower which could be a competitive advantage there.
- tjpnz 7y ago
  >Facebook may have an advantage on KYC as it already knows it's clients through their facebook activity and so may be able to get the costs lower which could be a competitive advantage there. What Facebook might know about someone is completely worthless when it comes to KYC. In the country I live there are even some government issued identity documents that won't cut it.

tim333 7y ago

I'm not sure legally they'd be much different to Coinbase (YC S12) selling you bitcoins.

deleted 7y ago

[deleted]

coachtrotz 7y ago

Facebook is licensed as a Money Transmitter under their Facebook Payments entity. Source: https://www.nmlsconsumeraccess.org/EntityDetails.aspx/COMPANY/918740 https://www.nmlsconsumeraccess.org/EntityDetails.aspx/COMPAN...