The US president does not believe in Facebook’s new cryptocurrency.
In June, Facebook announced its next attempt at expanding outside of social media platforms: The Libra cryptocurrency. It’ll be like Bitcoin, except its value will be pegged to a basket of assets, like government securities, to make it more stable. The world is unsure of how successful or disruptive Libra will be, and on Thursday the cryptocurrency got perhaps its biggest detractor yet: the president of the United States.
“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,” Donald Trump tweeted on Thursday night, before moving on to Libra in a subsequent tweet.
“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.”
Trump ended the tweet thread by boasting of the US dollar’s dependability and reliability. The message from the president is clear: If you want to invest in a currency, ditch the crypto and look to the US dollar.
Libra won’t be run by just Facebook. Rather, Facebook and its partners have created an organization, the Libra Association, to manage the technical aspects of the project and work with regulators to ensure that everything is on the up and up. Libra also has some built-in safeguards, which have been used in the real world, to make sure the value of the cryptocurrency stays stable. Facebook will build a wallet, called Calibra, though a wholly owned subsidiary that it says won’t share financial data with the social network.
Libra is expected to launch sometime in the first half of next year.
Facebook Basketcoin: Handful of Currencies in Contention to Back the Libra Crypto
As economic and political tension between the U.S. and China has recently been rising, the association backing Facebook’s planned Libra stablecoin cryptocurrency finds itself navigating through the superpowers’ high-stakes drama.
This week, Bloomberg reported that Facebook delivered a series of written responses Senator Mark Warner (D-VA), the current Vice Chairman of the U.S. Senate Intel Committee, regarding the Libra — a proposed “basketcoin” set to be underpinned by a series of major fiat currencies.
Sen. Warner had reportedly asked Facebook to provide answers on a series of concerns, not least among them being whether the Chinese yuan was going to be included in Libra’s currency basket. Notably, a trade war has recently heated up between the U.S. and China, with the former wanting to defend the dollar’s global position and the latter wanting to de-dollarize.
In their response to Sen. Warner, Facebook said the Libra Association — the Swiss-based body that governs the Libra and that currently has nearly 30 members — would have the final say on what currencies end up making it into the Libra’s basket of reserves.
Still, the social media giant conspicuously omitted mentioning the yuan as an initial contender to back the Libra in answering Sen. Warner. Instead, the company reportedly cited the dollar, the euro, the Japanese yen, the British pound, and the Singapore dollar (SGD) as currencies that are likely to help comprise Libra’s basket.
The first four of those major currencies come as no suprise, naturally. It’s the smaller SGD that is the standout of the bunch, though it’s no slouch either in being among the top 20 most traded currencies in the world.
China’s Concerns Coming to Fruition?
Of course, Facebook didn’t deliver Sen. Warner a “hard no” on turning to the yuan for the Libra. Still, the implicit possibility of the dollar being included in the basket while the yuan is excluded seems to play right into concerns expressed by top Chinese officials in recent times.
For example, Wang Xin, a senior researcher at the People’s Bank of China (PBoC), said earlier this year that the central bank was worried the Libra could further boost the U.S. dollar’s dominance:
“If the digital currency is closely associated with the U.S. dollar, it could create a scenario under which sovereign currencies would coexist with U.S. dollar-centric digital currencies. But there would be in essence one boss, that is the U.S. dollar and the United States. If so, it would bring a series of economic, financial and even international political consequences.”
Those anxieties have led to the PBoC accelerating its own plans for a Libra-like central bank digital currency (CBDC) that could beat Facebook’s global-minded Libra to the punch. In a public lecture given last week, Mu Changchun — the leader of the PBoC’s Digital Currency Research Lab — said the coming digitized yuan was about ensuring China’s independence.
“It is to protect our monetary sovereignty and legal currency status,” Changchun said of the project.
Facebook May Not Embrace Yuan, But Tether Does
Tether’s USDT dollar stablecoin has proven to be a controversial hit in the fledgling cryptoeconomy. Now, the company has moved toward the yuan in formally unveiling its CNH₮ yuan-pegged stablecoin.
“CNH represents a further expansion of Tether’s capabilities in facilitating the digital use of traditional currencies, such as US dollar (USDT) and euro (EURT),” Tether said in a September 9th announcement.
It remains to be seen if the CNH₮ can become as popular as Tether’s other stablecoin tokens, or whether the ruling Chinese Communist Party will quietly abide a digital yuan offering that is not under its direct control. But the Chinese nook of the cryptoeconomy is large, so Tether undoubtedly thinks the risk is worth the reward.
Facebook appoints two more lobbyists, faces more resistance from American lawmakers
- Previously, Facebook was requested to suspend its crypto project by lawmakers.
- The company added four additional lobbyists in the last two months.
Facebook has recently hired two more lobbyists as the company is facing resistance from lawmakers to launch Libra. Facebook wants to advance its reach in Washington. Bloomberg reported that lobbyists William Hollier and Michael Williams are now trying to win the lawmakers with their influences. As per the reports, Hollier, who is the president of Hollier Associates LLC, started lobbying for Facebook on blockchain policy in late August. He has earlier worked for Senator Mike Crapo (R-Idaho), the head of the Senate Banking Committee, which held a hearing on the privacy concerns of Libra previously.
Earlier, Facebook had hired Susan Zook, a former aide of Senator Crapo, to push for Libra in the Capitol Hill. Williams Group’s Michael Williams started lobbying for the company in mid-July. Besides Facebook, he also lobbies for the American Financial Services Association and Delta Air Lines Inc.
Facebook is determined to launch its cryptocurrency within mid-2020, which is its set deadline. Furthermore, the company also appointed four other lobby groups in the past couple of months to influence blockchain policymaking.
American political journalism company Politico reported that Facebook already used up $7.5 million on its Washington lobby groups this year. The company is now working with at least seven lobbyists for Libra including Sternhell Group, the Cypress Group, and the law firm Davis Polk.
Previously, numerous lawmakers in the US had requested Facebook to suspend the development of its crypto project until the regulatory issues are fixed. Meanwhile, in Europe, the social media company is facing an antitrust probe for its plans to jump in the payments sector with Libra.
Bank of England finally admits Governor Mark Carney held talks with Facebook’s Mark Zuckerberg as row rages over new currency
Mark Carney flew to the US for a secret meeting at Facebook’s headquarters with founder Mark Zuckerberg, the Daily Mail can reveal.
The Bank of England Governor is thought to have discussed the social network’s controversial plans for a digital currency, which will let people send money to each other without a bank account.
He went to Facebook’s plush new Silicon Valley campus, accompanied by Tom Mutton, the Bank’s director of financial technology, documents released under freedom of information laws show.
It is the first time the long-rumoured meeting between Carney and Zuckerberg has been acknowledged. The Bank refused to give details of what Carney, 54, and Zuckerberg, 35, discussed, and declined to reveal the cost of the trip, including how much was spent on flights and hotels.
Concerns about the currency, called Libra, have prompted MPs and experts to call on the Bank to give details of the pair’s discussion. Carney broke ranks with other central bankers to say he was keeping ‘an open mind’ about Facebook’s new currency Libra.