Facebook has been dealing with criticism and scrutiny since it unveiled Libra. But the backlash shows that the project is a real wake-up call.
David Marcus, Facebook’s blockchain chief, might have known he’d be playing a lot of defense after Facebook revealed its plans to create a digital currency. But no one can be truly prepared for ending up in the crosshairs of the US president.
The new currency, called Libra, “will have little standing or dependability,” Donald Trump tweeted on Thursday, adding that he’s also “not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air.”
“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….”
And Senator Sherrod Brown, the highest ranking Democrat on the Senate Banking Committee, recently sent a letter to the chairman of the Federal Reserve in which he argued: “We cannot allow giant companies to assert their power over critical public infrastructure … The Fed must take a proactive role to ensure that the payments system remains accountable to the public.”
Both the House Financial Services Committee and the Senate Banking Committee will hold hearings on Libra next week, and Marcus will testify in both.
Facebook asked for all this scrutiny. After all, it has made a grandiose claim that it is building a new “financial infrastructure” to support billions of people around the world, but has yet to reveal many details about just how it will pull that off. That said, the intensity with which politicians and government bankers are responding to Libra suggests they believe that this vision, or something like it, is plausible.
In other words, it looks as if Libra has been a wake-up call. Even if it doesn’t catch on, it’s likely that some other coin will eventually, perhaps one made by another big tech company. But the point is that many policymakers and central bankers now appear to accept this. Digital currencies will no longer be ignored.
Mr. Vint Cerf, one of the Fathers of Internet, also display concerns about Libra at the discussion on new digital currencies, a part of the Social Contract 2020 on July 13, 2019.