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In the past Two days ago, Federal Reserve Chairman Jerome Powell told members of both houses of Congress that he had "many serious concerns" about Facebook's crypto-currency Libra. These include privacy and money laundering issues, as well as the potential of the platform to destabilize monetary policy around the world, if it were to reach 2 billion users. from Facebook. It seems that the President of the United States was listening.
Gregory Barber covers cryptocurrency, blockchain and artificial intelligence for WIRED.
Late last Thursday, President Donald Trump launched a burst of three tweets declaring himself "not a fan of Bitcoin and other cryptocurrency" and evoking the use of "unregulated digital assets" for "the drug trafficking and other illegal activities ". He included Libra in this category, claiming that the platform "will have little status or reliability" and would fall prey to similar reliability issues. He suggested Facebook to acquire a bank charter to continue his efforts. Trump concluded with a patriotic message about the global primacy of the US dollar, suggesting he was not comfortable with Libra or other encrypted currencies becoming rival.
The tweets come as Facebook undergoes a tight control of its projects from US and foreign regulators. Regulators, especially those of central banks such as the Fed, fear that Libya will operate in a vacuum outside of the existing frameworks for global monetary policy. They are struggling with regulations that would impose proper control of the private financial network, controlling its own money supply. David Marcus, the Facebook leader who will head the company's new financial services division, Calibra, is scheduled to attend consecutive hearings in the House and Senate next week.
Facebook is far removed from the idea that he would himself oversee any form of monetary policy for Libya or behave like a bank. Although the company has piloted the development of the blockchain platform, it intends to hand over control to an association, which should include at least 100 other organizations from here launch, which will be based at Geneva Switzerland. This association will assume the management of the platform as well as the funds used to support the cryptocurrency Libra. In theory, he would also be responsible for monitoring transactions on the platform. In a Facebook message last week, Marcus responded to concerns about illegal activities on the Libra platform, noting that it would be closely monitored and that it would adhere to Know-Your-Customer money laundering laws.
In addition, Facebook is developing an internal application, also called Calibra, which will allow its own users to send payments via WhatsApp, Instagram or a stand-alone application. Facebook declares that these transactions will not affect the blockchain platform, unless a user sends Libra to a third-party application, and will instead be processed in Calibra. This suggests an experience closer to Venmo than bitcoin, with more typical protocols for combating fraud and illegal behavior.
Among the unhappy with Trump's anti-cryptocurrency tweets is right-wing provocateur Mike Cernovich and social media company Gab, a popular home for right-wing personalities. Gab has turned to cryptocurrency to stay afloat after being shut out by traditional payment companies.
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