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US Government Response to Facebook Libra

The cryptocurrency streets have been introduced to a new newsmaker – the Libra cryptocurrency has been on the spotlight since its announcement in June. All eyes are on Facebook in its move into the world of cryptocurrency through the determinedly unique Libra and Calibra. However, the US government has shown significant interest in this move, and the political class is worried that Libra is at least not good for the current global financial system.

In the semi-annual monetary policy testimony on July 10, Jerome Powell, the Federal Reserve Chairman observed that Libra should be subject to interrogation for its impacts on “Privacy, money laundering, consumer protection, and financial stability.” The Fed chair explained that Facebook needs to provide definite answers to these concerns before it can get a nod to proceed with the project. Admittedly, for a financial project targeting over a billion users, such questions cannot be assumed.

Earlier on July 2, five Democratic lawmakers lettered Facebook to stop working on the project until public trials on “risks and benefits of cryptocurrency-based activities” plus relevant “legislative solutions.” This response was geared by the intention to stop embracing ideas of a “too big to fail” financial system. So far, these concerns remain unexplored in public, but Calibra CEO David Marcus could shed insights in meetings with the Senate Banking Committee and House Financial Services Committee scheduled to happen on July 16 and July 17, respectively. The pressure is mounting for the lawmakers to investigate Libra as at least 30 consumer protection groups have sought the lawmakers to intervene.

On the same note, US President Donald Trump has criticized both Libra and Bitcoin as unacceptable because they are unregulated. On July 11, Trump tweeted that if Facebook wants to become a bank, they should be subject to the banking regulations.

The ambitious Libra project seems determined regardless of the adverse political and legal reactions from various quarters.

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