When Facebook Inc. (NASDAQ: FB) last month announced a new cryptocurrency called Libra, reaction was mixed. Even though the digital currency would be managed by a consortium called the Libra Association, of which Facebook would be a member but not the controller, the company’s track record didn’t inspire a lot of confidence.
One commenter who kept his powder dry was President Donald Trump. The wait is over now, however, following a series of tweets from the president last night in which he expressed his reservations. Particularly notable about this tweetstorm, Trump has sided with some of his chief nemeses, Congresswoman Maxine Waters (D-CA) and Fed Chair Jerome Powell, in criticism not only of Facebook’s Libra but cryptocurrencies in general.
Making the new digital currency’s path forward even more dicey are scheduled hearings before a number of congressional committees next week. Facebook’s David Marcus, the architect of Libra and Facebook’s digital wallet, Calibra, can expect to get grilled.
Trump’s position seems to be that the U.S. dollar is sufficient and that cryptocurrencies, based on “thin air” are “not money.” Here are the president’s tweets:
An industry group called the Blockchain Association responded almost instantly:
The essential conflict between the establishment (Trump, in this case) and the revolutionaries (the Blockchain Association) is between regulation (Trump is for it) and “power … into the hands of the people” (the Blockchain Association). If Trump, who has made a presidential career out of eliminating regulation, wants cryptocurrencies regulated, then he must really hate them.
If the president and both Houses of Congress gang up on Libra and other cryptocurrencies, then those digital currencies face an even rougher road to acceptance. Trump is right about the U.S. dollar and the benefit to the United States of being able to print the world’s reserve currency gives the country a primary role in the world’s financial markets, a position no U.S. president would willingly surrender.
A decentralized digital currency based on blockchain technology (however defined and implemented) may have a place in transactions among financial institutions and central banks, but the world financial system is not going to allow the inmates to run the asylum.