Federal Government Gears Up for Facebook Cryptocurrency Fight

The rhetoric surrounding Facebook’s proposed cryptocurrency, Libra, is almost too extreme to take seriously – on both sides of the conversation. However, this is Facebook. We have to take it all seriously, at least when it comes to personal privacy, your financial information, and (of course) world domination. Congress, for one party at least, is not going to risk letting the social media platform’s latest attempt to “improve” the world around us go unexamined and unchecked.

Maybe this is part of the reason why: According to a letter from some members of Congress to Facebook, “It appears that these products [Libra and its associated wallet and services suite] may lend themselves to an entirely new global financial system that is based out of Switzerland and intended to rival U.S. monetary policy and the dollar.” The letter, written and signed by democrat members of Congress, went on to say Facebook’s new endeavor “raises serious privacy, trading, national security, and monetary policy concerns.” Note: the letter was written by democrat congress members, who are not usually known for overt concern over issues of American dominance of anything.

Critics of the congressional reaction (or overreaction, depending on your point of view), rushed to point out that Libra is designed to bring financial development to countries without the platforms to accomplish this on their own. They even posited that the United States might fear that developing countries’ financial systems might threaten it if they were allowed to have access to what Facebook describes as a truly open currency that, unlike other cryptocurrencies, require what the platform describes as some sort of membership or “merchant acceptance” in order to participate. They have also spent a fair amount of time adamantly insisting that the current banking system is designed to keep the “unbanked” poor, paying high fees, and still unbanked. That may be the case or not, but Libra is not likely to resolve this given the claim that “anyone with a $40 smartphone and connectivity will have the ability to securely safeguard their assets, access the world economy, transact at a much lower cost, and over time access a whole range of financial services.” The only way this is likely to happen is if Libra’s third-party providers and partners start, en masse, providing their services entirely for free, overnight, for no sound business-related reason.

Interestingly, it appears the House Financial Services Committee, which wants to halt the Libra project until it can analyze it further, may not have the wherewithal to do so. Business Insider reported yesterday that, “for the time being” at least, “it is expected that Facebook will proceed with Libra as planned.” Facebook has continued to apply for licenses, registered with US Financial Crimes and Enforcement Network (FinCEN), and filed an application to operate a cryptocurrency business in New York. While the committee keeps calling for a halt, Libra could be permitted and ready to go while Facebook simply ignores the requests.

If that happens, at least certain lucky stakeholders in Libra could end up with 4,478 percent returns (or $44.7 billion in net gains to investors) when the currency goes live, wrote CoinDesk analysts Kirk Phillips and Adam Levine. The two describe Libra as “a beautiful and terrifying thing” thanks to the ability to get in early for astronomical (potential) returns and the likelihood that if Libra succeeds, it could eventually use its financial dominance to influence global policy from multiple countries around the world.

Tell us what you think:

  • Is Libra going to be good for the world?
  • Can we trust Facebook with this type of power?
  • Is Congress over- or under-reacting?

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