Cryptocurrency is not everyone’s cup of tea; and most definitely, not President Trump’s.
In a series of tweets on Thursday, the POTUS said that he is not a “fan” of cryptocurrencies, asserted that America has only one currency, criticized bitcoin, as well as told Facebook that they need a banking charter if they want to launch their newly announced crypto-based money called Libra.
Trump said cryptocurrencies are not money, and “Unregulated Crypto Assets can facilitate unlawful behavior, including drug trade and other illegal activity.”
“If Facebook and other companies want to become a bank, they must seek a new Banking Charter and become subject to all Banking Regulations,” said the president.
According to the President, the dollar is the only currency in America, and Libra, among other cryptocurrencies, are not “real money.”
“We have only one real currency in the USA, and it is stronger than ever, both dependable and reliable. It is by far the most dominant currency anywhere in the World, and it will always stay that way. It is called the United States Dollar!” Trump said in a tweet.
Trump’s sentiments echoed similar apprehensions from cryptocurrency critics who have been advocating against the growth of the “volatile” blockchain technology and crypto money. Many argue that those attributes count against the wider adoption of digital currencies.
But when Facebook announced Libra, they said that the new digital money is nothing like bitcoin and other cryptocurrencies. They said that it is banked on real currencies (like dollars) and government securities. The San Francisco-based company said that “Libra is a simple global currency and financial infrastructure that empowers billions of people.”
According to the white paper the company published to announce Libra, there are three things that makes the Facebook coin different from other cryptocurrencies that are already existing including bitcoin: It is built on a secure, scalable, and reliable blockchain; it is backed by a reserve of assets designed to give it intrinsic value; the independent Libra Association governs it tasked with evolving the ecosystem.
“The Libra currency is built on the “Libra Blockchain.” Because it is intended to address a global audience, the software that implements the Libra Blockchain is open source — designed so that anyone can build on it, and billions of people can depend on it for their financial needs. With the proliferation of smartphones and wireless data, increasingly more people will be online and able to access Libra through these new services. To enable the Libra ecosystem to achieve this vision over time, the blockchain has been built from the ground up to prioritize scalability, security, efficiency in storage and throughput, and future adaptability,” reads the white paper.
Amid Libra’s promises, many sectors have already raised concerns regarding the new venture from Facebook. Reports reveal that some of Facebook’s partner is already starting to have doubts regarding such an ambitious project.
According to a report by the New York Times, some of Facebook’s partners have only signed the agreement to be part of Libra Association partly because there is an out-clause that allows them to withdraw from the organization whenever they feel like the direction it is going to is something that they don’t want. They also know that they weren’t obliged to use or promote the digital token. At least seven of the partner companies share this sentiment.
Furthermore, many companies are hesitant to associate themselves with Libra citing that Facebook’s reputation in terms of data security is too risky, especially that controversies have been Facebook’s breakfast for the last few years.
Trump isn’t the only politician and government official to expressed opposition to the Libra effort. European officials have expressed concern regarding Libra, citing that the system, if widely adopted, could shake the global economy and rival national banks. French Finance Minister Bruno Le Maire sent a letter to officials from the G7 and International Monetary Fund calling for a group to examine Libra’s impact on the global financial system. Le Maire said that Libra must not become a “sovereign currency,” while a German politician noted Facebook’s potential to become a “shadow bank” to the global financial system.
US Representative Maxine Waters, chair of the House Financial Services Committee, among other members of the Congress also asked Facebook to halt working on Libra until it answers questions about privacy and security.