Facebook announced last month it would launch a global cryptocurrency in 2020. The announcement said Facebook and 28 partners would form a consortium. The partners include: MasterCard Inc., PayPal Holdings Inc., and Uber Technologies Inc.; among others. The new partnership will form under the name Libra Association. The purpose of Libra is to govern the new cryptocurrency.
Big Government’s Position…
President Trump took to twitter yesterday to weigh in on the Libra effort. He tweeted, “… 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…” He followed up with, “… 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 and International…”
Previously, the Federal Reserve Chairman Jerome Powell too took a position in on the matter. He told lawmakers that Facebook’s plan to build the Libra digital currency could not move forward. His position is that Libra must stop unless it addresses concerns. The listed concerns include privacy, money laundering, consumer protection and financial stability.
Powell said the Fed is establishing a working group to follow the project. He said the Fed is coordinating with other countries’ central banks. Several foreign central banks have also expressed concern about Facebook’s digital/crypto currency project.
What came before…
Bitcoin is the best-known digital/crypto currency. It was created in 2008 as an alternative to currencies controlled by governments and banks. Crypto trading and digital currencies remain largely outside governmental control. The market has also faced allegations of money laundering and terrorist financing.
No banks are currently part of the Libra group. JPMorgan Chase & Co, the largest U.S. bank by asset value, does plan to launch its own digital/crypto currency product.
Perhaps what we are watching is a battle shaping up between Big Tech and the banking industry. The most potentially destabilizing part of the coming confrontation is the Big Tech incursion into government control of money. Big Tech has been helped up to now by Big Government. Control of the money supply takes them clearly into conflict with both banking and Big Government. Get yourself some popcorn. This is going be fun.