On Thursday, 11 July 2019, US President, Donald Trump, posted a series of tweets in which he warned social media company, Facebook, against becoming a ‘bank’ — or face having to undergo the obstacles and regulations that all American banks do.
Trump wrote, “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”.
….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…
— Donald J. Trump (@realDonaldTrump) July 12, 2019
In subsequent tweets, the president shared his view on cryptocurrencies in general.
“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,” adds Trump. “Unregulated Crypto Assets can facilitate unlawful behaviour, including drug trade and other illegal activity.”
Trump is not the only politician to speak out against Facebook’s plan this week as Jerome Powell, Federal Reserve chairman, says the proposed crypto “raises many serious concerns regarding privacy, money laundering, consumer protection and financial stability”.
However, Facebook executive, David Marcus, has hit back by saying “the virtual coin will be built on a new blockchain infrastructure accessible from anywhere in the world — [I want to] ensure that Libra helps with the kinds of issues that the existing financial system has been fighting, notably around money laundering, terrorism financing and more”.
The discussions surrounding regulation, acceptance and implementation of Libra — and other cryptocurrencies in general — is possibly the result of a bureaucratic tug-of-war. On the other hand, what’s steadfast is Trump’s idea that Facebook, or Bitcoin, want to become a ‘bank’ — in the traditional sense of the word.
Cryptocurrencies have been widely successful because they don’t act like traditional banks — they are a digital store of value that’s given many people, especially in emerging markets who otherwise don’t have access to a conventional banking system, the opportunity to invest, build infrastructure and even buy groceries.
Bitcoin is just one example of what a digital currency can achieve. The coin utilises a decentralised system, known as the blockchain, to permanently and unalterably record transactions between users. Users can trade the Bitcoin or cash it out for a small fee with a number of secure and freely available crypto-wallets.
Facebook is attempting to take this idea even further — according to their whitepaper Libra is meant to “enable a simple global currency and financial infrastructure that empowers billions of people”. Simply put, Facebook wants to make financial transactions, such as transferring cash or buying products online, as painless as sending a message on Whatsapp.
So perhaps it’s safe to say that Bitcoin is not money, nor does it belong in a ‘bank’ — but that, Mr President, seems to be the point.
By Jenna Cook
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