Facebook Faces Bipartisan Resistance to Cryptocurrency Plans
15 Julho 2019 - 5:02PM
Dow Jones News
By Dave Michaels and Kate Davidson
WASHINGTON -- Government officials from both parties came out
swinging against Facebook Inc.'s plans to launch its own
cryptocurrency.
Treasury Secretary Steven Mnuchin on Monday said Facebook Inc.
faces a high bar to persuade authorities that it can safely launch
the digital money and guard against risks ranging from money
laundering to terrorism financing. Rep. Maxine Waters (D., Calif.),
the chairwoman of a powerful House committee, separately drafted
legislation that would block the social-media company's plans to
operate the cryptocurrency, called Libra.
The U.S. developments came as Group of Seven industrialized
nations planned this week to discuss risks posed by Libra and other
cryptocurrencies during a meeting on Wednesday and Thursday in
Chantilly, France, a French official said. Benoît Cœuré, an
executive board member of the European Central Bank, is expected to
deliver a report on the topic during the meeting, the official
added.
Mr. Mnuchin's remarks underscore the political firewall
Washington has quickly erected against Facebook's project, unveiled
last month as a way to facilitate digital payments around the
world. Facebook has said it hopes to make the Libra cryptocurrency
available by next year.
"These cryptocurrencies have been dominated by illicit
activities and speculation," Mr. Mnuchin said in a press
conference. "To the extent that Facebook can do this correctly and
can have a payments system correctly with proper
[anti-money-laundering safeguards], that's fine. They've got a lot
of work to do to convince us to get to that place."
Facebook said Monday that Libra would be regulated by
Switzerland's financial watchdog, adding that the digital money
would never compete with national currencies or undermine the role
of central banks.
Mr. Mnuchin's comments framed the debate over Libra one day
ahead of Facebook executive David Marcus's appearance before the
Senate Banking Committee. The company's overture to regulators was
included in written testimony Mr. Marcus provided to the Senate
panel, where he faces the challenge of easing concerns that
Facebook -- already embroiled in policy fights over digital
advertising and customer data -- is primed to disrupt finance, one
of the world's most highly regulated sectors.
President Trump, Federal Reserve Chairman Jerome Powell and
other policy makers have already voiced broad misgivings about
Facebook's foray into crypto, a space dogged by concerns about
money laundering and manipulative trading. Some Democratic members
of Congress have called on Facebook to suspend work on Libra until
Washington is satisfied with the oversight regime.
"We know we need to take the time to get this right," Mr. Marcus
said in written testimony. "Facebook will not offer the Libra
digital currency until we have fully addressed regulatory concerns
and received appropriate approvals."
Libra's primary regulator would be the Swiss Financial Markets
Supervisory Authority, Mr. Marcus said, because the group in charge
of the project will be based in Geneva. The group includes more
than a dozen other companies, including Mastercard Inc. and eBay
Inc., indicating that Facebook wouldn't control Libra after it is
off the ground.
The cryptocurrency's main purpose is to enable people to use and
transfer money around the globe more cheaply than current options
allow, Facebook said. The Silicon Valley giant added Libra would be
most useful in countries where banking options are scant and the
home currency is volatile.
Facebook has said Libra would be a "stablecoin" pegged to a
basket of developed-world currencies. The coins will be backed by a
reserve of financial assets that include bank deposits and
government bonds.
The Libra group "will work with the Federal Reserve and other
central banks to make sure Libra doesn't compete with sovereign
currencies or interfere with monetary policy," Mr. Marcus said in
his testimony.
Libra isn't an investment, Mr. Marcus also said: "People will
not buy it to hold like they would a stock or a bond."
If it isn't an investment, it would be free from oversight by
the Securities and Exchange Commission. The SEC enforces
investor-protection laws that require frequent and detailed public
disclosures. The SEC is reviewing whether Libra should fall under
its jurisdiction, according to people familiar with the matter.
--Sam Schechner and Bojan Pancevski contributed to this
article.
Write to Dave Michaels at dave.michaels@wsj.com and Kate
Davidson at kate.davidson@wsj.com
(END) Dow Jones Newswires
July 15, 2019 15:47 ET (19:47 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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