In June, Facebook announced its next attempt at expanding outside social media platforms: the Libra cryptocurrency. It’ll be like Bitcoin, except its value will be pegged to a basket of assets, like government securities, to make it more stable. The world is unsure of how successful or disruptive Libra will be, and on Thursday the cryptocurrency got perhaps its biggest detractor yet: the president of the United States.
“I am not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air,” Donald Trump tweeted on Thursday night, before moving on to Libra in a subsequent tweet.
“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].”
Trump ended the tweet thread by boasting of the US dollar’s dependability and reliability. The message from the president is clear: If you want to invest in a currency, ditch the crypto and look to the US dollar.
Trump isn’t the only high-profile figure to question Libra this week. The head of the US Federal Reserve, Jerome Powell, reportedly told House lawmakers on Wednesday that the US’ central bank has “serious concerns” about Libra. Both the Federal Reserve System and a separate panel called the Financial Stability Oversight Council are meeting to discuss Libra alongside global policy makers, Powell also reportedly said.
Libra won’t be run by just Facebook. Rather, Facebook and its partners have created an organization, the Libra Association, to manage the technical aspects of the project and work with regulators. David Marcus, who heads both Facebook’s Messenger department and the Libra project, says Facebook will be just one of many voices in the Libra Association, and won’t have special influence.
“Facebook won’t have any special responsibility over the Libra Network,” he wrote in a FAQ page.
Libra also has some built-in safeguards, which have been used in the real world, to make sure the value of the cryptocurrency stays stable. Facebook will build a wallet, called Calibra, though it will be a wholly owned subsidiary that Facebook says won’t share financial data with the social network.
Libra is expected to launch in the first half of next year.
Meanwhile, Trump’s news-making outburst over cryptocurrencies reinforces a federal court’s ruling this week that the leader of the US can’t block users on the social network, because it’s a public forum. The unanimous decision by the US Court of Appeals for the 2nd Circuit affirms the ruling made by the US District Court for the Southern District of New York in 2018 after Trump was sued for blocking users the previous year.