Facebook's Crypto Proposal Triggers Fury In Congress: Bitcoin Fans Take Note
By Mike Shedlock of MishTalk
Wednesday, June 19, 2019 11:24 AM EDT
Republican and Democrat lawmakers demand hearings and a moratorium on Facebook's "Libra" cryptocurrency proposal.
After nearly a year of speculation, Facebook has finally unveiled its plans to Create a Cryptocurrency Called Libra and debut in 2020.
The cryptocurrency will be managed by a separate Switzerland-based foundation initially backed by Facebook and 27 other organizations.
These organizations are known as Founding Members, and the foundation hopes to have about 100 of them by launch next year. They include businesses like Uber and Lyft, payments companies like Visa, Mastercard and Paypal, investors like Andreessen Horowitz and Union Square Ventures, and nonprofits and academic institutions like Kiva and Women's World Banking.
In exchange for investing at least $10 million in the foundation's reserves (which back the Libra token's value), these members will get to run validator nodes for the Libra blockchain — "a rack of servers that will run transactions," as the foundation's currency chief describes it.
They'll also receive special Libra "investment tokens," which are different from the basic form of the cryptocurrency, and get a vote as part of the foundation's council.
For some of these members, Libra may provide a new channel for acquiring customers. "If you're Spotify [a founding member], you're thinking about how there are a lot of people in markets you want to serve that don't have an ability to pay you digitally," Kevin Weil, product chief of Facebook's cryptocurrency division, told Axios.
Swift Reaction
Bloomberg reports Facebook Triggers Fresh Washington Fury Over Crypto Project
Facebook Inc.'s plans to create a new cryptocurrency that can be used for everything from commerce to money transfers is facing pushback from angry U.S. lawmakers.
House Financial Services Committee Chairwoman Maxine Waters urged the company to halt development of the token until Congress and regulators can examine it. Other lawmakers demanded hearings and questioned whether the coin, called Libra, will have appropriate oversight.
"Facebook has data on billions of people and has repeatedly shown a disregard for the protection and careful use of this data," Waters, a California Democrat, said in a statement. "With the announcement that it plans to create a cryptocurrency, Facebook is continuing its unchecked expansion and extending its reach into the lives of its users."
Representative Patrick McHenry, the top Republican on the financial services panel, wants Waters to hold a hearing. He said Congress needs to go "beyond the rumors and speculations and provide a forum to assess this project and its potential unprecedented impact on the global financial system."
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Mish Shedlock
Investment Advisor Representative - Sitka Pacific Capital Management
Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an ... more
Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.
Visit Sitka Pacific's Investment Management Page to learn more about wealth management and capital preservation strategies of Sitka Pacific.
My Mish Talk - Global Economic Trend Analysis blog typically has commentary every day of the week. I am also a contributor to TalkMarkets and a "professor" on Minyanville, a community site focused on economic and financial education.
When not writing about stocks or the economy I spend a great deal of time on photography and in the garden. I have over 80 magazine and book cover credits. Some of my Wisconsin and gardening images can be seen at MichaelShedlock.com.
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