There’s no denying that Facebook’s newly-detailed digital currency has attracted a lot of regulatory attention. However, one Senator hints that it is Libra’s potential scope for disruption and adoption that is making global policymakers sweat.
Speaking on CNBC’s “Squawk Box” segment earlier today, Senate Finance Committee member Pat Toomey described the original digital asset as a fascinating innovation. But, he then states that he has reservations about whether it will successfully become a medium of exchange. He argues that Bitcoin’s perpetual price volatility makes it difficult to use in day-to-day retail:
“Something as volatile as [Bitcoin] really detracts from its ability to be a meaningful, usable currency.”
Bitcoin is too volatile at the moment to be a "practical medium of exchange" but Libra could solve that problem, says Senate Finance committee member @SenToomey #btc $FB #bitcoin pic.twitter.com/tbC0OrFQuE
— Squawk Box (@SquawkCNBC) July 16, 2019
A Fiat-Backed Future With Libra
Observing an “intriguing difference”, he then turned his attention towards Facebook’s recently-detailed Libra digital currency project. Most notably, the social media giant’s digital asset will be pegged to a basket of fiat currencies. Senator Toomey believes that it stands a much greater chance of widespread adoption than Bitcoin.
“If you have the security and the ease and low cost of transactions of a digital currency, which I think [Calibra] intends to, when you combine it with the stability of an established, mature fiat currency then maybe you do actually have a currency that can be adopted broadly.”
That’s not to mention the potential longevity of the project. Experts in the field believe that thanks to the asset’s integration into Facebook platforms like WhatsApp and Messenger, the built-in audience will make Libra more of a surefire hit than other cryptocurrencies. For example, Marc Boiron, blockchain lawyer at FisherBroyles, told BeInCrypto that Libra “will impact non-privacy focused cryptocurrencies in the long term in a positive way” thanks to users already being comfortable with Messenger and other apps.
Still Waiting On Regulation
Facebook’s Libra catapulted the issue of cryptocurrency right to the center of policy-makers’ discourse during its reveal last month. In the last seven days, US President Donald Trump has tweeted about Bitcoin, Libra, and cryptocurrency, Federal Reserve Chair Jerome Powell has described Bitcoin as a legitimate store-of-value, and the UK’s Chancellor of the Exchequer has spoken with cautious optimism on Libra.
A recent example of policymakers acknowledging cryptocurrencies is US Treasury Secretary Steven Mnuchin branding them a “national emergency”. According to a report in Forbes earlier today, he recently said the following to reporters during a press conference:
“This is indeed a national security issue… Cryptocurrencies such as bitcoin have been exploited to support billions of dollars of illicit activity like cyber crime, tax evasion, extortion, ransomware, illicit drugs, and human trafficking.”
He added that “money launderers and terrorist financiers” might misuse Libra.
What do you think? Could Libra steal Bitcoin’s thunder or will the two settle into their own respective niches? Let’s hear your thoughts below.