On July 16th, a child who just learned to walk got a pack of matches, Facebook burned the house again and again, and called each arson a learning experience.” On the 16th, the US Senate At the Banking Committee, Ohio State Democrat and senior senator Sherrod Brown said unceremoniously to David Marcus, head of Libra, the face-to-face cryptocurrency project that came to testify.
Facebook has billions of users around the world. In view of this influence, Facebook's Libra project white paper released on June 18 has received wide attention and has not been reduced. However, due to the unclear global cryptocurrency regulatory path and the existence of trust loopholes in Facebook, the Libra project has been questioned by the US government, Congress, the Federal Reserve and global regulators, and it is expected to successfully launch a test of trust and regulatory obstacles.
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Facebook still has a reputation problem
Facebook's own reputation and personal privacy issues and high crime risks brought about by the Libra project are the main points of criticism. Since its inception, Facebook has continued to infringe on personal privacy and data breach scandals, especially in the role of spreading fake news during the 2016 US presidential election, making Facebook's reputation “falling down”. Recently, Facebook was issued a $5 billion ticket by the Federal Trade Commission for a scandal involving user material sharing with Cambridge Analytica last year.
At the hearing on the 16th, Facebook was accused by the senators' fierce rhetoric. Brown pointed out that Facebook was "very dangerous," saying that "through one scandal after another, it does not deserve our trust."
Martha McSally, the Republican Senate of Arizona, even more bluntly said, "I don't believe in Facebook, and I don't think so alone." She believes that Facebook continues to develop new business models despite a series of scandals, and this kind of behavior is hard to trust.
Hawaiian state senator Brian Schatz sent a question to Marcus. "Are you still working on cybersecurity, foreign interference, privacy, extremism, fake news, etc?"
Faced with a series of sharp questions and doubts, Marcus had to admit that Facebook had made mistakes before, saying "we have been working hard and will continue to work hard to make the situation better" and defend the Libra project. Facebook has partnered with more than a hundred partners to launch "You don't have to trust Facebook."
Cryptographic currency regulation is still in the gray zone
The Libra project is built on top of the blockchain, backed by asset reserves and managed by the Libra Association. Its essence is a cryptocurrency item. Although Facebook believes that its Libra project is designed to reduce international transfer costs and help more than 1 billion people without bank accounts to enter the global financial system, the global cryptocurrency regulation is still gray, and decentralized cryptocurrency It is easy to be used by criminals, and many countries are not active in cryptocurrencies such as Libra.
For example, US President Trump is not "cold" about this. On the 11th, Trump wrote on his social media account that the cryptocurrency, including bitcoin, is not his "dish" because they are not money, and the dollar is the only currency in the United States. Trump pointed his finger at Libra and criticized it for its lack of reliability, arguing that "unregulated cryptographic assets promote illegal behavior, including drug trafficking and other illegal activities."
On the 10th, Fed Chairman Powell also attended the congressional hearing, saying that unless the Libra project can address concerns such as privacy, money laundering, consumer protection and financial stability, Facebook cannot promote the Libra project. He said that if the risks are right, then he supports financial innovation. But the huge platform Facebook has is the difference between the Libra project and other cryptocurrency projects. Because of the sheer size of Facebook itself, any problems it may bring “will reach the level of systemic importance”.
U.S. Treasury Secretary Mnuchin said on the 15th that the Treasury is deeply worried about the Libra project because cryptocurrencies may be used by money launderers and terrorist funders. He believes that cryptocurrencies such as Bitcoin are used to support cybercrime, tax evasion, extortion, development of ransomware, drug trafficking, and human trafficking. "It is indeed a national security issue." The Ministry of Finance will regulate cryptocurrencies such as Bitcoin and Libra to the highest standards.
In addition to the US government, the Libra project has also attracted the attention of global regulators. The Group of Seven (G7), including the United States, Britain, and France, has set up a working group on the Libra project to weigh the risks and opportunities of the project and study how to regulate cryptocurrencies to avoid money laundering and other problems.
In this regard, Marcus said in his testimony that the Libra project was under supervision and review during the period from now to the future. “Before we completely resolved the regulatory concerns and obtained appropriate approval, Facebook Libra cryptocurrency will not be released."
Unclear definition of the nature of cryptocurrencies leads to regulatory gaps
In fact, due to the differences in the definition of cryptocurrency in the industry, the nature of cryptocurrency is either sovereign currency or assets, which has led to the global regulatory body still vacant in the field of cryptocurrency. In the United States, at least six regulators, including the Federal Reserve, the US Securities and Exchange Commission (SEC), and the Treasury, are inextricably linked to virtual currency, and the leaders are difficult to determine.
When attending the US Congressional hearing, Powell was also unable to answer the questions raised by lawmakers on the challenge of cryptocurrency regulation. At the hearing, he said that the Fed “has no right to apply the banking privacy rules to Facebook or Libra projects” and that no single institution can stand up to monitor it. Powell believes that the US government may need to establish a new regulatory body to solve the problems related to digital currency.
It can be said that the Libra project was born, which has re-ignited the concerns of global policy makers and the market to strengthen digital currency regulation. It is reported that a "Keep Big Tech Out Of Finance Act" is being circulated among Democrats of the US House Financial Services Committee to prevent large technology companies from providing financial services or issuing digital currencies. The bill proposes to include technology companies that provide online platform services and have annual revenues of more than $25 billion. Once they violate the regulations, they will face up to $1 million a day.
Although the bill is still in the discussion stage between the House Democrats and is likely to trigger opposition from Republican lawmakers in the House of Representatives, the emergence of this bill also indicates that the US government is strengthening and expanding the supervision of the financial sector, especially the cryptocurrency sector. . In the future, as people's cognition and acceptance of cryptocurrencies become more and more extensive, it is extremely urgent for global regulators to introduce clear digital currency regulatory rules as soon as possible.
Article source: Xinhua Finance