Fed’s Jerome Powell Calls for Halt to Facebook’s Libra Currency Project
Powell joins the side of regulators wary and critical about Facebook’s Libra project, calling for a halt until regulatory concerns are answered.
Facebook’s Libra project faced a backlash from US Federal Reserve’s Chairman, Jerome Powell, who believes the project “cannot go forward” unless serious concerns are addressed, reported Reuters. With this statement, Powell joins the side of most international regulators, both central banks and financial oversight authorities. The prevailing opinion is that Libra may be a threat both to monetary policy and to commercial banks and personal finance.
“Libra raises many serious concerns regarding privacy, money laundering, consumer protection and financial stability,” Powell said during the semi-annual testimony on monetary policy before the U.S. House of Representatives Financial Services Committee.
“I don’t think the project can go forward” without addressing those concerns, he added later.
Powell added that Libra does not fit within the Fed’s regulatory scheme, and has potentially large-scale impact.
The Libra Association has stated multiple times that it is open to discussions, and Facebook has held preliminary talks with the US Commodities Futures Commission. Libra will supposedly have a fixed price, based on a basket of international currencies, and will be backed by fiat held by specially assigned sellers.
During Powell’s speech, the price of Bitcoin (BTC) accelerated its drop, adding to factors that wiped out $1,600 in just one day. Previously, Facebook’s announcement gave BTC a boost for one of its previous rallies to a yearly peak near $13,800.
Currently, it is still possible for any startup to create a digital asset. But Facebook’s high profile, combined with concerns about privacy and influence, are weighing down the Libra project. So far, no other digital asset, including Bitcoin, has received similar attention or attempts to freeze the project.
The potential of Libra to immediately reach more than 2 billion users is also causing worldwide concerns. Recently, it became clear Calibra, the chief Libra wallet, will not be available in India, to avoid breaking local monetary control laws against the grey economy.