Blockchain Backed by U.S. Bonds Differentiates Service from Paypal
From skepticism by news analysts and U.S. Representatives to tech writer comments that it’s a smart move for the long-term, the announcement that Facebook will launch a cryptocurrency called Libra generated a range of reactions.
Rep. Maxine Waters, Chairwoman of the House Financial Services Committee, expressed doubts about the reliability of Facebook, according to a story by Reuters news service. Some of her Republican committee members also expressed doubt, saying Facebook was too big and was careless with user information. Waters says Facebook should halt development of Libra.
“Given the company’s troubled past, I am requesting that Facebook agree to a moratorium on any movement forward on developing a cryptocurrency until Congress and regulators have the opportunity to examine these issues and take action,” Waters said in a statement.
U.S. Senator Mark Warner, a Virginia Democrat who also sits on Senate Banking Committee, said Facebook would exploit its social networking base size to crowd out the competition in mobile payments and other areas. Even French Finance Minister Bruno Le Maire said Facebook needs more regulation before pursuing an online payment service.
An analyst interviewed by CNBC.com said the legality of Libra would be in question because of its unusual use of the banking rules.
“Cryptocurrencies are so new that the manner in which they’re regulated or not regulated is still being sorted out,” said banking analyst Bert Ely. Most cryptocurrency regulation so far pertains to securities laws governing speculative investments.
According to PCMag.com, if the open source currency goes forward, it will happen in the first half of 2020. Facebook plans to have the nonprofit Libra Association control Libra, while a new Facebook-owned subsidiary called Calibra will release a wallet for Libra tokens and other banking and finance products—”a move that could turn Facebook into a financial services giant in addition to a social and advertising one.”
The Calibra wallet would be built into WhatsApp, Messenger and its own app, according to TechCrunch.com.
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