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Libra Will Upset World Economy if It Isn’t Regulated Tightly, G7 Warns

The G7 warned it “cannot accept private companies issuing their own currencies without democratic control” as Libra continues to face resistance.

Cryptocurrencies such as Libra risk upsetting the world’s financial system if they are not regulated tightly, G7 finance ministers have warned.

According to Reuters, French finance minister Bruno Le Maire told a news conference on July 18 that the G7 “cannot accept private companies issuing their own currencies without democratic control.”

His remarks followed informal talks in Paris, where the Group of Seven expressed vehement opposition to the prospect of firms having as much power as countries in creating means of payment.

The ministers and central bank governors also warned:

“Stablecoins and other various new products currently being developed, including projects with global and potentially systemic footprint such as Libra, raise serious regulatory and systemic concerns.”

Benoit Coeure, a European Central Bank board member, had told the meeting that global stablecoins could boost competition in the payments sector, reduce fees for consumers and support greater financial inclusion. However, he warned that they could undermine efforts to clamp down on money laundering, terrorism financing and tax compliance.

Global pushback

The warnings come after Facebook faced tough questions about Libra at hearings in Congress on Tuesday and Wednesday of this week. David Marcus, the CEO of the tech giant’s Calibra crypto wallet, stressed that the project would not launch until all regulatory concerns had been addressed.

This didn’t stop politicians at the hearing from criticizing Facebook for its past failings in protecting user data, and questioning why the company thought it was fit to launch a stablecoin on such a global scale.

Other lawmakers expressed concerns that Facebook could undermine the U.S. dollar and the American economy by basing Libra in Switzerland.

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Anti-Bitcoin Congressman: Libra Could be as Damaging as 9/11

Bitcoin Skeptic Bashes Libra

On Wednesday, Libra was the primary topic of discussion for the House Committee on Financial Services. Unsurprisingly, there was a multitude of U.S. politicians that expressed disdain towards the corporate cryptocurrency project. One specific comment stood out though, for both the Bitcoin community and those watching eagerly from the sidelines.

A few hours into the six-hour plus hearing, Brad Sherman, a Democratic Representative from the overall pro-innovation California, took the stage. In an unprecedented turn of events, Sherman claimed that while Facebook is truly innovating with its Libra blockchain, innovation as a concept and trend isn’t good per se. (What?)

The Californian representative noted that the “most innovative thing that happened this century” was when Osama Bin Laden masterminded the horrid 9/11 attacks on American soil, crashing a multitude of planes into key landmarks and places of business. What followed this attack was a war on terror, during which the U.S. was mandated to step up in terms of its technology and weaponry. In that sense, the 9/11 attacks were “innovative”.

Nuances of this analogy aside, Sherman went on to quip that Libra “may do more to endanger America than even [9/11].” Shocker, right?

He backs this statement by noting that cryptocurrencies are a fan favorite of terrorists, so to speak, presumably thinking of the reports on the purported use of Bitcoin by the Islamic State. What he is suggesting that if there is another terrorist attack on American soil, it may just be funded by digital assets, which in his mind includes Libra despite its differences from the decentralized cryptocurrencies that readers of this publication know and love.

Even if crypto-related terrorism isn’t a threat, Sherman goes on to note that Libra, which he hilariously dubbed “Zuck Bucks” for some inexplicable reason, is likely to see use by “drug dealers, tax evaders, and sanctions evaders.”

The Californian Representative then went on a tirade about how David Marcus, the head of Blockchain at Facebook, was the only one in the hot seat, remarking that “Zuck” should be grilled. Sherman roared:

“But someone with an understanding of the politics of this country needs to explain to Mr. Zuckerberg that if cryptocurrency is used to finance the next horrific terrorist attack against Americans, a hundred lawyers standing in a row, charging $2,000 an hour are not gonna protect his rear end from the wrath of the American people.”

He joins Mark Cuban, the “Shark Tank” star; Donald Trump, the president of the United States; and Federal Reserve chairman Jerome Powell as prominent skeptics of the Silicon Valley-backed coin.

Not All Doom and Gloom

It is important to note that Wednesday’s impassioned hearing wasn’t all doom and gloom for Libra, and thus the rest of the cryptocurrency ecosystem.

One notable highlight was when Meltem Demirors of Coinshares broke down Bitcoin for the Congress committee, specifically touching on how it is different than Libra and how it actually operates. She received some tacit support from two or three Congressmen, one of which somewhat lauded Bitcoin as an “unstoppable force” in an earlier CNBC interview.

Photo by Vadim Sherbakov on Unsplash

The post Anti-Bitcoin Congressman: Libra Could be as Damaging as 9/11 appeared first on Ethereum World News.

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China Leads the World in Google Searches for Facebook’s Libra

China has the highest rate of “Facebook Libra” Google searches, while the U.S. is ranked 25th, according to Google Trends’ data.

China is the global leader when it comes to searching for “Facebook Libra” on Google one month after the release of Libra’s white paper.

China keeping a close eye on Facebook’s Libra

As of July 18, China is the first in the list of countries googling of Facebook’s new cryptocurrency project, according to data from Google Trends.

Based on the data, China has the highest proportion of search queries for Libra, with a maximum value of the query popularity of 100. The top five countries include St. Helena, ranked second with a value of 37, as well as Singapore, Hong Kong and Luxembourg.

“Facebook Libra” Google searches over the past 30 days

“Facebook Libra” Google searches over the past 30 days. Courtesy of Google Trends

At the same time, the same query is surprisingly low in the United States, with estimated query value of 10. As such, the home country of Facebook is ranked 25th in the list, based on the popularity of Libra searches in Google.

Marcus confirms Libra will compete with WeChat, Alipay

Google Trends data is not the only source proving the massive spike of interest of China to Facebook’s Libra. China’s Sina Weibo, the country’s biggest social media network, has also recorded an increased popularity of Libra. 

China-focused online Twitter resource Cnledger reported today that queries for “Libra will compete with Alipay and WeChat” is now the second most popular search on Weibo.

Meanwhile, David Marcus, head of Facebook’s blockchain subsidiary Calibra, has recently confirmed that the company is planning to compete in its payment solution with Chinese payment giants such as Alibaba Group Holding’s Alipay and Tencent Holdings’ WeChat Pay. Marcus acknowledged the intention during the hearing on Libra with the Financial Services Committee of the United States House of Representatives on July 17.

On July 8, China’s central bank announced it started working on its own digital currency in response to Facebook’s Libra as it could pose a risk to the country’s financial system.

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G7 Approves Japan’s Cryptocurrency-Based SWIFT Alternative

The Japanese government is attempting to spearhead the creation of a new, global cryptocurrency payments network that would be similar to SWIFT.

The Japanese government is attempting to spearhead the creation of a new, global cryptocurrency payments network that would be similar to SWIFT.

Replace SWIFT with a global crypto payments network?

Citing an anonymous source, a Reuters report published on July 18 claimed that the country’s push for the network is motivated by a resolve to combat money laundering more effectively.

While plans are being kept firmly under wraps, the source alleged that Tokyo hopes to have the network established within the next few years. 

Plans for the network were reportedly initially proposed by Japan’s Ministry of Finance and its national regulator, the Financial Services Agency (FSA).

The prospective network has been approved for oversight by the Financial Action Task Force — a G7-initiated intergovernmental organization that promotes legal, regulatory and operational measures that aim to fight money laundering on a global scale. 

As Reuters notes, anti-money-laundering (AML) compliance has loomed large in regulators’, central banks’ and governments’ scrutiny of Facebook’s plans to launch its own stablecoin, dubbed Libra.  

Ahead of this week’s meeting of G7 finance ministers in France this week, Japan had set up a national liaison conference — involving the Bank of Japan, the Ministry of Finance and the FSA — tasked with investigating the impact of Libra on monetary policy and financial stability. 

The G7, cryptocurrencies and the fight against money laundering

France had pre-empted Japan in creating a G7 taskforce that will examine how central banks can regulate cryptocurrencies like Libra.

In June, the FATF revealed plans to strengthen control over crypto exchanges to preclude digital currencies from being used in money laundering and related financial crimes.

This spring, the Japanese House of Representatives officially approved a new bill to amend national laws that govern crypto regulation. The revised acts — which include specific AML measures focused on privacy coins — are set to come into force in April 2020.

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Ocasio-Cortez Criticizes Corporate-Controlled Money in House’s Libra Hearing

Congresswoman Alexandria Ocasio-Cortez highlighted the idea of scrip in today’s Libra hearing, remarking that it is destabilizing.

New York Congresswoman Alexandria Ocasio-Cortez addressed the control of Facebook’s Libra cryptocurrency in today’s United States House Committee on Financial Services hearing.

As per a recording of the event, provided by C-Span on July 17, Ocasio-Cortez addressed Calibra wallet CEO David Marcus, asking, “[Facebook] wants to establish a currency and act through its wallet as — at minimum — a payment processor. Why should these activities be consolidated under one corporation?”

Regarding the membership of the Libra Association, Ocasio-Cortez asked, “Were they [the members] democratically elected?” After Marcus answered that it was not, but was governed by membership standards, Ocasio-Cortez summed up Libra as “a currency controlled by an undemocratically-selected coalition of largely massive corporations.” 

From the issue of corporate control, the representative pivoted to an issue of monetary policy saying:

“You stated yesterday in front of the Senate Committee that you would be open to accepting 100% of your pay in Libra. In the history of this country, there is a term for being paid in a corporate-controlled currency … It’s called ‘scrip.’ The idea that your pay could be controlled by a corporation instead of a sovereign government. Do you think that there is any risk here? We’ve seen from scrip, to the issues with how Facebook handled our elections, we’re seeing a destabilizing in our public goods.”

Company scrip has been illegal as a form of payment in the U.S. for almost a century, as they were discluded from counting as “proper mediums of payments” with the Fair Labor Standards Act of 1938. 

Ocasio-Cortez also questioned Marcus’ view on whether Libra, as well as currency in general, should be a public good. Marcus said that “sovereign currency should remain sovereign,” and stated it was not his place to determine whether Libra should be a public good.

As previously reported by Cointelegraph, JPMorgan Chase CEO Jamie Dimon claimed that Libra will not be a threat to the financial giant in the foreseeable future.