For those most part, governments have ignored Bitcoin. While the cryptocurrency’s proponents see it as the future of money and finance, with the potential to usurp fiat currencies as we know them today, governments haven’t played along. More likely than not, they see BTC as nothing more than a criminal’s tool or a form of money for those on the margins.
But, when Facebook unveiled Libra in June, everything changed. Some of the world’s most powerful individuals came out to denounce the “cryptocurrency” project, including Donald Trump, Treasury Secretary Steven Mnuchin, and politicians of a similar caliber the world over.
One of their primary qualms, alongside the idea that Libra could theoretically be used by criminals looking to do harm, is that this Facebook-backed crypto asset, due to its likely large network at launch, will be the equivalent of a new fiat currency in a global context. In other words, the launch of Libra, some fear, could begin to encroach on the U.S. dollar’s hegemony in the U.S., the Euro’s dominance in the Eurozone, or what have you.
However, David Marcus, an alumnus of the “PayPal Mafia” and Facebook’s head of Calibra (blockchain), has come out to rebut these concerns. He wrote in an extensive Twitter thread that, claiming that at its core, Libra is meant to be a “better payment network and system running on top of existing currencies” for a global audience, not an entirely new paradigm meant to satisfy the world’s needs.
1/ About monetary sovereignty of Nations vs. Libra:
Indeed, as Marcus goes on to point out, the cryptocurrency will be backed 1:1 by a “basket of strong currencies” (U.S. dollar, Euro, among other leading currencies, but purportedly not the Chinese yuan), disallowing printing money from thin air:
“As such there’s no new money creation, which will strictly remain the province of sovereign Nations… We also believe strong regulatory oversight preventing the Libra Association from deviating from its full 1:1 backing commitment is desirable.”
This basket reserve model means that in reality, Libra is an amalgamation of fiat monies, not something entirely independent and new like Bitcoin.
Regulators Maintain Skeptical Stance Towards the Crypto
Marcus’s comment comes as the world’s central bankers have convened in Basel to talk stablecoins and the potentially damaging effect they may have on the economy. A member of the European Central Bank’s executive board stated the following on stablecoins:
“They give rise to a number of serious risks related to public policy priorities. The bar for regulatory approval will be high.”
Indeed, politicians from both Germany and France have both pushed the idea that Libra’s development in the Eurozone should be blocked until further notice.
Yet, the director general of the Libra Association, Bertrand Perez, stated that the stablecoin should make it to market by the second half of 2020 — a bit later than the early-2020 launch date hinted at Libra’s controversial unveiling in June.