About the past Two days ago, Federal Reserve Chairman Jerome Powell told members of both houses of Congress that he has "many serious concerns" about Libra's cryptocurrency on Facebook. These include issues related to privacy and money laundering, as well as the potential of the platform to destabilize monetary policy around the world, should it succeed with the 2 billion Facebook users. It seems that the president of the United States was tuning in.
Gregory Barber covers cryptocurrency, blockchain and artificial intelligence for WIRED.
On Thursday night, President Donald Trump unleashed a three-tweet storm that declared "he's not a fan of Bitcoin and other cryptocurrencies," and referred to the use of "unregulated digital assets" for "drug trafficking and other illegal activities. " that category, saying that the platform "will have little reputation or reliability" and would fall into similar reliability issues. He suggested that Facebook would need to acquire a bank letter to continue their efforts. Trump concluded with a patriotic message about the global primacy of the US dollar, suggesting that he is not comfortable with Libra or other cryptocurrencies becoming rivals.
The tweets occur as Facebook scrutinizes its plans from regulators in the United States and abroad. Regulators, especially those of central banks like the Federal Reserve, are worried that Libra will operate in a vacuum outside existing frameworks for global monetary policy. They are dealing with regulations that would maintain a private financial network, overseeing their own money supply, appropriately under control. David Marcus, the Facebook executive who will head up the company's new financial services division, Calibra, is scheduled to appear in consecutive hearings in the House of Representatives and the Senate next week.
Facebook has distanced itself from the idea that it will oversee any form of monetary policy for Libra or act as a bank. While the company has spearheaded the development of the blockchain platform, it intends to cede control to an association, planned to include at least another 100 organizations per launch, which will be based in Geneva, Switzerland. That association will assume the administration of the platform, as well as the funds used to support Libra's cryptocurrency. In theory, he would also be responsible for overseeing the transactions on the platform. In a Facebook post last week, Marcus responded to concerns about illegal activities on the Libra platform, noting that he would carefully monitor and adhere to Know-Your-Customer's money laundering laws.
On the other hand, Facebook is developing an internal application, also called Calibra, that will allow its own users to send payments through WhatsApp, Instagram or a separate application. Facebook says that those transactions will not touch the blockchain platform, unless a user sends Libra to a third-party application and, instead, is managed within Calibra. That suggests an experience more similar to Venmo than to bitcoin, with more typical protocols to combat fraud and illegal behavior.
Among those disgusted with the tweets against Trump's cryptocurrency were right-wing provocateur Mike Cernovich and social media company Gab, a popular home for right-wing personalities. Gab resorted to the cryptocurrency to stay afloat after being excluded by traditional payment companies.
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