US Government Requests Facebook Cease Libra Development
It has finally happened. The United States monetary system feels threatened by cryptocurrency. On July 2nd, the House of Representatives Committee on Financial Services sent a letter requesting Facebook’s Libra project be shelved.
Facebook and its partners have been asked to stop development of the stablecoin due to potential global instability that could result from a new type of monetary system. In their words:
”This raises serious privacy, trading, national security, and monetary policy concerns for not only Facebook’s over 2 billion users, but also for investors, consumers, and the broader global economy.”
The letter was addressed to Mark Zuckerberg (CEO), David Marcus (Facebook’s Head of Crypto), and Sheryl Sandberg (COO), and asked for an immediate moratorium on the development of stablecoin Libra and dedicated wallet Calibra.
Implications About U.S. Financial Interests
There are obviously levels to this play by the US Government. Part of their worry is that this will be a Swiss-based global financial system that will cause global instability, but on a deeper level, they are worried about control.
What happens if the USD is no longer the reserve currency of choice? And how will this affect their ability to continually print money if no one is demanding theirs anymore? It is basically a matter of controlling global demand for currency.
To this point, the letter says that “Failure to cease implementation before we can do so, risks a new Swiss-based financial system that is too big to fail.” This ignores the fact that the US financial system is already too big to fail, and went through a massive recession in 2008 that resulted in hefty taxpayer-funded bailouts.
The letter requests that implementation plans are delayed until regulators have time to properly dive into the potential effects of implementation.
Privacy Issues to Keep In Mind
One of the most unbiased arguments that can be made against the implementation of Libra is around privacy. Facebook has undergone numerous scandals recently after being caught using user data in ways that were not previously expected or authorized. If they continue to expand their reach like this, then the worry is their hold over user data will be even stronger.
Facebook’s David Marcus rebutted this thought by saying that there is no need to trust Facebook, as:
“And Facebook won’t have any special responsibility over the Libra Network. But we hope that people will respond favorably to the Calibra wallet [made by Facebook]. We’ve been clear about our approach to financial data separation and we will live up to our commitments and work hard to deliver real utility.”
So far, Libra’s announcement has resulted in a positive outcome for Bitcoin, as it is expected that this will result in more inflows of fiat currency into the crypto space. Additionally, Facebook’s heavy interest and intended use of blockchain technology brings a new level of legitimacy to it.
Libra could also be a gateway to many altcoins as retail investors begin to question the current idea of money. Decentralized digital coins will likely continue to increase in demand as these users realize their utility, and for cryptocurrencies with different use cases from Bitcoin, like Ethereum or Zcash, this can only mean good things.