Published: Wed, July 17, 2019
Markets | By Otis Pena

Ohio Democrat Sherrod Brown blasts Facebook's cryptocurrency plans: They already 'broke journalism'

Ohio Democrat Sherrod Brown blasts Facebook's cryptocurrency plans: They already 'broke journalism'

However, Marcus also said that American services that will use the Libra digital currency, including Facebook's own Calibra wallet for the Libra currency, will still be governed by USA money transmitting laws.

USA lawmakers from both sides of the aisle are set to grill Facebook Inc on its cryptocurrency plans on Tuesday, as the project continues to draw intense scrutiny from financial regulators and politicians across the globe.

On Monday afternoon, U.S. Treasury Secretary Steven Mnuchin said in a White House briefing that criminal misuse of cryptocurrency is a "national security issue". "This is indeed a national security issue". He then singled out Libra and said he was "not comfortable today" with Facebook's launch plan. "To be clear, FINCEN will hold any entity that transacts in bitcoin, Libra, or any other cryptocurrency to its highest standards", Mnuchin added. The Libra Reserve itself will be backed by a basket of currencies including the US dollar, the British pound, the euro and the Japanese yen.

"Treasury takes very seriously the role of the USA dollar as the world's reserve currency, and we'll continue our efforts to protect our country and secure the USA and global financial systems".

Facebook, the 15-year old social media giant, topped 2 billion monthly users in June.

David Marcus, head of Calibra, the Facebook subsidiary in charge of the forthcoming Libra cryptocurrency, will testify in the Senate to make a case for the digital currency - amid concerns from the Trump administration that cryptocurrencies could pose a number of problems, including terrorism.

"Facebook might not intend to be risky but surely they don't respect the power of the technologies they are playing with", said Senator Sherrod Brown, an Ohio Democrat.

As he continued his opening statement, Brown pivoted to the Libra project.

Marcus, who will appear before the House Financial Services Committee Wednesday, pushed back on some of the criticism, explaining that the token isn't meant to compete with countries' national currencies and won't interfere with central banks' monetary policy.

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Indeed, his remarks kicked off the skeptical line of questioning, which focused heavily on Facebook's historical missteps in privacy rather than the specifics of the crypto project itself. "I don't trust you guys", said Republican senator Martha McSally.

While it will be the first time the European Union has directly targeted Amazon's online retail business model, it's the third time the company has been probed by the regulator, following tax and e-book investigations.

Amid growing bipartisan resistance to its proposed digital coin, Facebook says that it won't move forward with its Libra cryptocurrency without full government approval and regulatory oversight.

Although analysts are noting that these comments seemed to rule out any type of Bitcoin ban, it does signal that a regulatory crackdown is looming on the horizon, and that Facebook's recently announced Libra initiative may not ever come to fruition.

"I believe that if America does not lead innovation in the digital currency and payments area, others will", Marcus will say. "If we fail to act, we could soon see a digital currency controlled by others whose values are dramatically different", he said.

The House won't be left out, with its Libra hearing scheduled for tomorrow, asking Marcus to do it all over again in just 24 hours.

This implies the need for KYC for cryptocurrency users around the world which could make the process of buying and selling crypto more hard especially for those who use exchanges. Trump also suggested that Facebook would need a bank charter to launch Libra. "Similarly, Facebook Libra's "virtual currency" will have little standing or dependability".

The president highlighted the US dollar's dominance in a follow-up tweet. "Why are we happy with 3% growth when we regularly hit 5% growth not so long ago?", Long wrote. "It is by far the most dominant currency anywhere in the World, and it will always stay that way". These barriers are one of the reasons why economic growth is sluggish in the United States.

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