Further complicating Facebook’s cryptocurrency ambitions, President Donald Trump has dismissed Libra as a farce. The tech titan unveiled the cryptocurrency -- along with its proposed digital wallet, Calibra -- last month.
“Facebook Libra’s ‘virtual currency’ will have little standing or dependability,” Trump tweeted on Thursday.
In a series of tweets, Trump said he was “not a fan of bitcoin and other cryptocurrencies,” generally. These digital assets are “not money,” according to Trump. He added their value is highly volatile and “based on thin air.”
Additionally, Trump warned that “unregulated crypto assets” can facilitate unlawful behavior, including drug trade and other illegal activity.
If Facebook and other companies want to get into the banking business, Trump said they will have to seek a banking charter and become subject to standard banking regulations.
Among politicians and policy makers, fear over Facebook’s banking ambitions appear to have bipartisan support.
Indeed, the Democratic-led Congress just requested that Facebook suspend development of Libra and Calibra.
Leading the effort is Rep. Maxine Waters (D-CA), chairwoman of the House Financial Services Committee, who threatened to challenge Facebook’s blockchain strategy shortly after its debut.
In a new letter sent to Facebook executives earlier this month, Waters and fellow House members suggested the company’s latest effort “raises serious privacy, trading, national security and monetary policy concerns for not only Facebook’s over 2 billion users, but also for investors, consumers and the broader global economy.”
Waters and her colleagues requested Facebook and its partners immediately agree to a moratorium on any movement forward on Libra and Calibra.
“It appears these products may lend themselves to an entirely new global financial system that is based out of Switzerland and intended to rival U.S. monetary policy and the dollar,” they warned.
Analysts say it is hard to overstate the potential significance of Facebook’s move into cryptocurrency.
“We believe this may prove to be one of the most important initiatives in the history of the company to unlock new engagement and revenue streams,” RBC Capital Markets analysts wrote in a note to investors last month.
Facebook doesn’t plan on controlling the currency on its own. Rather, it intends for Libra to be governed by an independent association based in Switzerland, whose current members include financial giants such as Visa, Mastercard and PayPal, as well as Uber and other high-profile companies.
The company says Calibra, as a newly formed Facebook subsidiary, would not share account information or financial data with Facebook Inc. or any third party without customer consent.
Facebook also promises that Calibra customers’ account information and financial data will not be used to improve ad targeting across Facebook’s family of products.The Senate Banking Committee is expected to hold a hearing on July 16 to review Facebook’s blockchain strategy.