Story by: Steven Russolillo
Facebook Inc. ’s Libra cryptocurrency gained a pair of powerful skeptics ahead of a congressional hearing next week on the social-media giant’s ambitious plan to create a world-wide payments network.
President Donald Trump late Thursday said Libra “will have little standing or dependability,” in a series of tweets slamming bitcoin and other cryptocurrencies. Earlier in the day, Federal Reserve Chairman Jerome Powell told the Senate Banking Committee that Libra “raises a lot of serious concerns, and those would include around privacy, money laundering, consumer protection, financial stability.”
The remarks are a preview of the grilling Facebook executives will face when they appear before the Senate Banking Committee and House Financial Services Committee Tuesday and Wednesday to answer questions about Libra. They also highlight the regulatory uncertainty that still surrounds cryptocurrency a decade after bitcoin’s launch.
A Facebook spokeswoman declined to comment on Mr. Trump’s tweets. She said the company is aligned with the Fed chairman on the need for public discourse and not moving too quickly. David Marcus, the Libra project’s leader, has said the company is committed to “a collaborative process with regulators, central banks and lawmakers.”
Mr. Trump’s tweets came after legislators in both political parties had expressed broad concern about Libra. Backed by Facebook and more than two dozen other companies, the Libra coin differs from bitcoin in that it will be pegged to a basket of government-issued currencies. Users could send it to each other electronically and use it to make purchases on Facebook and across the internet.
Facebook’s plans for Libra are the most audacious yet to bring digital currencies to the masses. Yet the lack of regulatory clarity has hindered their adoption in the U.S.
Donald J. Trump
….Similarly, Facebook Libra’s “virtual currency” will have little standing or dependability. If Facebook and other companies want to become a bank, they must seek a new Banking Charter and become subject to all Banking Regulations, just like other Banks, both National…
…and International. We have only one real currency in the USA, and it is stronger than ever, both dependable and reliable. It is by far the most dominant currency anywhere in the World, and it will always stay that way. It is called the United States Dollar!
I am not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air. Unregulated Crypto Assets can facilitate unlawful behavior, including drug trade and other illegal activity….
In three tweets, Mr. Trump said he is “not a fan” of cryptocurrencies, declaring they aren’t money and that their values are “highly volatile and based on thin air.” Unregulated digital assets, he said, could “facilitate unlawful behavior, including drug trade and other illegal activity.”
Mr. Powell questioned the feasibility of Facebook’s 2020 launch target.
“The idea that this would be going into implementation within 12 months, I think, is not going to be proven right,” he said. “I think we’re going to take more time than that.”
Congress is considering at least three bills to resolve some legal issues surrounding digital money. And earlier this week, the Securities and Exchange Commission cleared a blockchain startup to start selling bitcoin-like digital tokens, a first-of-its-kind offering that could give young cryptocurrency businesses a new fundraising template in the U.S.
In an interview earlier this month, Binance Chief Executive Changpeng Zhao called the U.S. regulatory environment for cryptocurrencies perplexing. Binance, one of the world’s largest cryptocurrency exchanges by trading volume, operates largely outside the U.S.
“It’s confusing to us and it’s confusing to the industry players even in the U.S.,” he said. “Not having clarity is really bad.”
Still, Mr. Trump’s remarks were welcomed by some in the industry: While U.S. authorities might remain wary of digital currencies, they say, the attention shows the industry’s growing importance.
“The President speaking out against unregulated virtual assets indicates his recognition of the threat Libra may pose to the financial status quo,” said Tom Maxon, head of U.S. operations at CoolBitX, a blockchain security and hardware wallet company.
“I dreamt about a sitting U.S. president needing to respond to growing cryptocurrency usage years ago,” Brian Armstrong, co-founder and chief executive at Coinbase, a U.S. platform for buying and selling bitcoin and other cryptocurrencies, wrote on Twitter. “First they ignore you, then they laugh at you, then they fight you, then you win. We just made it to step 3 y’all.”