Reasons Why US Government Won’t Ban Libra Cryptocurrency
Does the U.S. government have the power to terminate Libra? What can it do?
Things are heating up for Libra: This week’s United States congressional hearings showed that many politicians are not convinced by the safety aspects of Facebook’s cryptocurrency project, as they grilled the social media giant on privacy- and trust-related issues. In response, Facebook keeps stressing Libra’s compliance with regulators and readiness to discuss possible frameworks.
Meanwhile, a drafted bill titled “Keep Big Tech out of Finance” surfaced right before the testimonies before Congress took place. So, does the U.S. government have the power to terminate Libra — which is something Rep. Maxine Waters famously requested soon after the project’s white paper was released?
Regulators’ arguments against Facebook’s Libra: privacy scandals, “broken journalism,” and “genocide”
At this point, the regulatory environment in the U.S. seems rather hostile toward Libra — even President Doland Trump has spoken against the project, saying that the social media giant’s digital currency “will have little standing or dependability.” During the remark, Trump also stressed the importance of the U.S. dollar — which seemed to echo the sentiments of a number of central banks around the world, which are worried that Libra’s arrival could undermine their sovereign currencies. According to Trump:
“If Facebook and other companies want to become a bank, they must seek a new Banking Charter and become subject to all Banking Regulations, just like other Banks, both National and International. 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!”
Other vocal opponents include the Senate Banking Committee and the House Financial Services Committee. Most of their complaints stem from Facebook’s involvement in a series of high-profile privacy scandals. Indeed, just a few days before the Libra hearings, the Wall Street Journal reported that the social media giant had reached a record-breaking $5 billion settlement with the Federal Trade Commission (FTC) over repeated privacy violations — namely the 2018 Cambridge Analytica data privacy scandal, among other data breaches and leaks.
The Banking Committee hearing, which took place in Congress on July 16, showed that it will be difficult for Facebook to change regulators’ opinion toward Libra. For instance, while presenting his statement, Sen. Sherrod Brown of Ohio went as far as to say that Facebook “broke journalism” and “helped incite a genocide," referring to the ongoing conflict in Myanmar.
Further, when Brown asked David Marcus, the head of Facebook’s crypto wallet, Calibra, "Do you really think people should trust Facebook with their hard-earned money?" Marcus replied that Facebook “will have no special privilege,” the senator then interrupted,“Mr. Marcus, you know better than that.”
Brown subsequently referred to Libra as a “recipe for more corporate power over markets and over consumers.” That, combined with remarks from other politicians, such as Rep. Waters, who have asked Facebook to halt the development of Libra “given the company’s troubled past,” seems to coincide with the arrival of a drafted bill titled “Keep Big Tech out of Finance,” allegedly deriving from within the U.S. House of Representatives Financial Services Committee. The document reads:
“A large platform utility may not establish, maintain, or operate a digital asset that is intended to be widely used as medium of exc