Facebook to defend plans for cryptocurrency before Senate committee

By July 16, 2019 Bitcoin Business
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In this photo illustration, a visual representation of a digital cryptocurrency coin is displayed before a Facebook logo on June 17 in Paris. (Chesnot/Getty Images via Bloomberg)

Facebook’s plans to launch a global currency, known as Libra, has ignited a bipartisan and international backlash.

On Tuesday, the technology giant will face some of its Senate critics.

Facebook has pitched the cryptocurrency, which would be available to its 2 billion users worldwide, as a way to bridge a gap in the financial system for those who lack access to traditional banking. But regulators around the world and lawmakers in the United States have questioned whether Libra would threaten government-backed currencies and give Facebook reign over an unprecedented global financial system.

“We know we need to take the time to get this right,” David Marcus, the head of Calibra, the Switzerland-based association that would run Libra, is expected to tell the Senate Tuesday, according to his prepared testimony.

On Monday, Treasury Secretary Steven Mnuchin said in a White House briefing that criminal misuse of cryptocurrency is a “national security issue.” Last week, Federal Reserve Chair Jerome H. Powell told Congress that Libra raises “serious concerns.”

President Trump said he is not a supporter of cryptocurrencies such as Libra. “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,” Trump said in a tweet last week.

[President Trump takes aim at Facebook’s cryptocurrency, Libra, saying it should be regulated]

It has also received a skeptical reception from Wall Street. The industry has become weary of Silicon Valley encroachment on the financial industry and questioned whether Libra would face the same strict, and often cumbersome, oversight as does a traditional bank.

“As long as it’s [a] level playing field reviewed by regulators, we have no problem with what anyone does,” Jaime Dimon, the chief executive of JPMorgan Chase, said in a call with reporters Tuesday.

Just a few years ago, Dimon drew the ire of the crypto community when he called bitcoin a “fraud.” But since then, JPMorgan, the country’s largest bank, has begun preparing a pilot program for an internal cryptocurrency, JPMCoin. Its reach would be limited to internal transactions with the bank’s corporate clients.

Dimon did not respond to a question about whether the bank would join the Calibra coalition backing Libra.

“We’ve been talking about blockchain for seven years now, and very little has happened,” Dimon said in another call with analysts later. “And you’re going to be talking about Libra three years from now.”

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