Libra is being threatened by US politicians

Facebook LIBRA

The last few days have brought renewed levels of chaos and uncertainty where crypto markets are installed. These levels of disconnection come in part from a letter sent by Senators Sherrod Brown and Brian Schatz to the CEOs of Visa, Mastercard, and Stripe.

Gabor Gurbacs tweet LIBRA

 

The letter highlights the concerns of senators around the Libra Project, Facebook’s cryptocurrency, including their lack of understanding of how Facebook and the other participating members would deal with money laundering, terrorist financing and other financial regulations. Frankly, sending a letter to the CEOs of private sector companies is not surprising, but a specific paragraph of the letter does.

Before the end, the senators affirmed:

“Facebook Libra seems to want the benefits of participating in financial activities without the responsibility of being regulated as a financial services company. Facebook is trying to achieve that goal by displacing the risks and the need to design new compliance regimes for the members of the Libra Association and their companies. If you take this activity, you can expect a high level of scrutiny from regulators not only in Libra-related activities, but in all payment activities. ”

This letter led to the announcements of Visa, Mastercard, and Stripe to leave the Libra Association last Friday. They are joined by eBay, Mercado Pago, PayPal and yesterday Booking Holdings. They cannot be blamed. Who wants to fight against the United States government?

The pressure applied to the members of the Libra Association is important and it is emphasized that regulators and legislators almost always cite their concerns with money laundering, KYC, or other preventive regulations when talking about digital currencies. However, according to recent estimates, they claim that more than 2 billion dollars are washed each year.

This whole situation is becoming quite complex and there is no easy solution but it can lead us to the following issues:

  1. Dollar Tokenization – This would create a more accessible, cheaper and faster to use world reserve currency. It would also create a new level of transparency that could stop unnecessary government spending, reduce corruption and increase tax revenues.
  2. Adopt Bitcoin – The decentralized digital currency cannot be closed and its technology provides a system that cannot be manipulated. This leads to a high probability that some countries adopt Bitcoin and eventually becomes a better option than their state-nation currency. If this happens worldwide, the first countries to cross the chasm (a term used in the US financial slang “crossing the chasm”) will have a significant advantage.
  3. Partner with private companies – If regulators and legislators really want to stop money laundering and terrorist financing, it might be helpful to focus on building solutions to do that. Instead of fighting the innovators of new technologies, governments would be better if they partnered with them and worked together to build solutions with win-win scenarios.

After the recent actions of these US senators, Facebook will have to be encouraged to overcome obstacles.

 

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