Trump calls to regulate Facebook’s crypto project
President Trump denounced various cryptocurrencies, including Facebook’s newly announced Libra, on Thursday as lawmakers and regulators express deep concern about the social media giant’s financial services ambitions.
In a series of tweets, Trump said he was “not a fan” of digital ledger-based currencies such as bitcoin, insisting they could be used easily to conduct criminal transactions.
“I am not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air. Unregulated Crypto Assets can facilitate unlawful behavior, including drug trade and other illegal activity,” Trump tweeted Thursday night.
Special criticism for Facebook’s Libra: Trump also ripped Facebook for its plan to launch a payments system next year, in which users exchange money through a proprietary cryptocurrency called Libra.
The Swiss nonprofit set up to control Libra is not a chartered bank, but Trump insisted that Facebook must seek a formal federal approval to become one if it seeks to enter the financial services industry.
“Similarly, Facebook Libra’s ‘virtual currency’ will have little standing or dependability. 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,” he tweeted.
“We have only one real currency in the USA, and it is stronger than ever, both dependable and reliable,” Trump continued. “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!”
Congress agrees: Trump’s skepticism of cryptocurrencies and Libra specifically reflects concerns of many lawmakers and regulators across the ideological spectrum.
Lawmakers insist that Facebook’s massive reach and history of privacy breaches could make its foray into financial services a dangerous gambit. The Democratic-controlled House Financial Services Committee and GOP-controlled Senate Banking Committee are set to grill Libra chief David Marcus in hearings next week.
And the Fed: And Federal Reserve Chairman Jerome Powell warned in congressional testimony Wednesday and Thursday that Libra poses “serious concerns” for the global economy.
“It cannot go forward without there being broad satisfaction with the way the company has addressed” privacy, money laundering, consumer protection and financial stability, Powell said Wednesday.
“All of those things will need to be addressed very thoroughly and carefully.”
Powell added that regulators may label Libra as a systemically important financial institution. That designation would subject Libra to strict capital and liquidity standards the Fed applies to megabanks.
There is also wide bipartisan concern in Washington that cryptocurrencies are not adequately policed for illicit financing. Regulators have homed in on the surge of financial schemes based on cryptocurrencies, though many consumers exchange legitimate digital coins without incident.