Facebook’s cryptocurrency faces ‘uphill climb’ as Trump attacks it
As Trump targets Libra, Facebook’s cryptocurrency faces ‘uphill climb’ after call for bank charter
By FOX NEWS
As Facebook Opens a New Window. prepares to launch its Libra cryptocurrency with a group of international business partners, growing political pressure and looming federal regulations threaten to derail the social media giant’s plan to establish a global financial services network before it debuts.
President Trump argued Thursday that Facebook should have to register as a bank and submit to banking regulations if it plans to move forward with Libra, which company officials have touted as a faster, cheaper platform than traditional financial services. Trump’s criticism follows bipartisan scrutiny in Congress, where committees in both houses have called on Facebook to submit to public hearings.
Efforts to regulate Libra are unlikely to result in a push for Facebook to secure a bank charter, according to experts. But as officials seek ways to protect the U.S. financial system from perceived risks associated with cryptocurrencies, Libra will likely be subject to costly regulations that could cause Facebook to rethink the initiative.
“Libra will not need a bank charter. However, and this is an important, however, Libra, and specifically, financial transactions conducted with Libra coin, will need to comply with important financial laws, notably the Bank Secrecy Act and related anti-money laundering regulations,” banking analyst Bert Ely told FOX Business. “The cost of complying with those regulations may be so great that Libra coin will not be financially viable and hence will never become a financial reality.”
Facebook has already taken steps to reassure regulators about “Libra,” which was announced amid lingering concerns over the company’s data privacy practices. The company has stressed that it will not exercise direct control over Libra. Rather, Facebook will be one of 29 companies that participates in the Libra Association, an independent Switzerland-based entity that will manage the cryptocurrency.
David Marcus, head of Facebook’s cryptocurrency segment Calibra, is set to testify before both the Senate Banking Committee and the House Financial Services Committee in the coming days. U.S. lawmakers have called on Facebook to halt all Libra proceedings until proper oversight and regulations can be implemented.
Fed Chairman Jerome Powell also expressed reservations about Libra this week, warning that the cryptocurrency “raises many serious concerns regarding privacy, money laundering, consumer protection and financial security.” The Fed is coordinating with figures at central banks in other countries to monitor the project.
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Critics of cryptocurrencies, such as bitcoin, have long held that the platforms are havens for illicit activity because they are unregulated and have no ties to central financial institutions. Facebook said Libra will allow for instant transfers with money without fees, provide financial service support to unbanked individuals and a stable alternative for those living in regions with economic or political volatility.
“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,” Trump wrote on Twitter. “Unregulated Crypto Assets can facilitate unlawful behavior, including drug trade and other illegal activity.”
—— AUTO – GENERATED; Published (Halifax Canada Time AST) on: July 14, 2019 at 01:53PM