The Chairman of the Federal Reserve, Jerome Powell, recently spoke before the US House Financial Services Committee. In his talk, Powell put an emphasis on that Facebook’s Libra crypto must handle regulatory concerns. Powell noted that unless there is “broad satisfaction” with the way Facebook does this, he does not think Libra can go forward.
Libra “cannot go forward” without broad satisfaction
These comments have had a substantial effect on the cryptocurrency market. Most major cryptos, along with Bitcoin, have fallen dramatically following Powell’s comments.
It is currently unclear whether Powell’s comments are the sole cause of the drop in market performance, but they nonetheless seem to be related.
Specifically, Powell noted that Facebook might face hurdles if the company does not comply with regulations.
Rep. Steve Stivers asked Powell what would happen “if Facebook can’t sufficiently answer your questions about anti-money laundering , Know Your Customer, what would your message be to the banks that provide banking to Facebook, and what would your advice to Facebook be?”
“I just think it [Libra] cannot go forward without there being broad satisfaction with the way the company has addressed money laundering, all of those things. The number of concerns that I list at the beginning, data protection, consumer privacy, all of those things will need to be addressed very thoroughly and carefully.”
Libra has “potentially systemic scale”
Moreover, Powell also recognized that the scale of Facebook’s crypto project is massive. In extension, this comes as an admission that cryptocurrency project can represent a separate system to existing fiat systems. Specifically, Powell explained.
“I think it [Libra] is something that doesn’t fit nearly or easily within our regulatory scheme. It does have potentially systemic scale.”
This, however, is not the first time that Powell has discussed the matter of cryptocurrencies. In a June 19th press conference, Powell noted that the Federal Reserve does not have direct authority over cryptocurrencies. Nevertheless, Powell said that the Fed’s policies could still be quite influential.
Moreover, Chairwoman Maxine Waters – who has previously called for a moratorium on Libra development – also asked Powell regarding whether the Fed has concerns over monetary policy concerning Libra. Powell answered in the same vein as his other comments:
“Libra raises many serious concerns regarding privacy, money laundering, consumer protection, and financial stability. These are concerns that should be thoroughly and publicly addressed before proceeding.”
Image Source: CNN
Rasmus Pihl is a writer for Toshi Times by day and an avid follower of the cryptocurrency industry by night. Rasmus holds a Bachelor’s Degree in Marketing from the Gothenburg School of Business, Economics, and Law and runs a Swedish marketing consulting firm. Moreover, when he isn’t writing for Toshi Times, traveling, working or changing the world in some other capacity, Rasmus is more than likely caught up in postgraduate studies.