Facebook must seek banking licence: Trump

President Trump has hit out at Facebook’s plan to launch the Libra digital currency and has said that the social media giant must apply to become a licensed bank if it wishes to operate in the US.

In a stream of Tweets last night Trump revealed that he is “not a fan of Bitcoin and other Cryptocurrencies”, which he said were volatile, not real money and “based on thin air.”

He also underlined the risk for unregulated crypto assets to: “facilitate unlawful behavior, including drug trade and other illegal activity.”

Targeting Facebook’s plans to launch its Libra digital currency in 2020, Trump said: “Similarly, Facebook Libra’s ‘virtual currency’ will have little standing or dependability.”

“If Facebook and other companies want to become a bank, they must seek a new Banking Charter and become subject to all Banking Regulations, just like other Banks, both National and International,” he said.

His pronouncement on Libra comes after US federal reserve chairman Jerome Powell told Congress this week that Facebook’s plan raises “serious concerns” over data privacy and financial stability, warning that the currency “cannot go forward” until regulatory and consumer protection issues have been addressed.

Facebook has maintained that it is aware of the need for a public dialogue over the potential impact of Libra, and has pointed to the launch of the project as part of the Libra Association, which along with 27 other organisations including Mastercard, PayPal and Uber, is aiming to engage with governments, central banks and regulators to ensure a stable roll out for the digital currency.

It is widely expected that the move, if rolled-out successfully, will disrupt the digital payments landscape, with big tech firms such as Amazon and Google set to explore their own potential to tap into the payments and financial services market.

Trump insisted that such digital and cryptocurrencies compare unfavourably to the US dollar, the global reserve currency, as a store of value and dismissed the idea that a system of virtual or digital tokens will eventually replace fiat currency.

“We have only one real currency in the USA, and it is stronger than ever, both dependable and reliable. It is by far the most dominant currency anywhere in the World, and it will always stay that way. It is called the United States Dollar!”

Facebook has sought to address concerns raised by US lawmakers and central banking figures over the need for new regulation to prevent disruption to the banking system.

An explanatory note on Libra from David Marcus, a former president of PayPal who now oversees the development of Facebook's digital currency project states: "We’re talking about something new, at scale in a very regulated industry, and if this is not done right, it could definitely present systemic risks no one wants."

It adds: "This is why we believe in and are committed to a collaborative process with regulators, central banks, and lawmakers to ensure that Libra helps with the kinds of issues that the existing financial system has been fighting, notably around money laundering, terrorism financing, and more."

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