Tuesday, 23 July, 2019

Trump says cryptocurrencies are too volatile, based on 'thin air'

Calibra Libra Facebook is developing its own app Calibra for Libra. | Source Facebook
Ginger Lawrence | 14 July, 2019, 00:00

President Trump wants to see cryptocurrencies undergo the same regulations as banks and the banking industry: '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, ' Trump wrote on Twitter.

President Donald Trump joined a growing list of politicians that are questioning Facebook's entrance into the cryptocurrency market with Libra, its upcoming digital token.

But Trump said that Libra has "little standing or dependability".

According to the POTUS, Facebook has to seek a new Banking Charter, becoming subject to all national and global banking regulations in order to provide financial services.

The cryptocurrency is to be backed by reserves of real-world money such as dollars, making it more stable than the likes of bitcoin which is prone to huge swings.

Trump isn't the only one who has issues with Facebook's plan to launch its digital token Libra. "Unregulated Crypto Assets can facilitate unlawful behavior, including drug trade and other illegal activity", he first tweeted, before turning his ire on Facebook.

In his latest salvo, the US President has dismissed cryptocurrency as "based on thin air" and distinctly un-American when weighed against the stability of the US dollar.

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Facebook announced last month it would launch Libra in 2020 to speed up payments between its platforms and online shops.

His American counterpart at the Federal Reserve also broached the topic Wednesday and Thursday when testifying before Congress.

Powell stressed that before proceeding, Facebook needs to address "serious concerns" in regards to "privacy, money laundering, consumer protection and financial stability". "Its by far the most dominant currency anywhere in the World, and it will always stay that way".

At the Senate Testimony earlier this week, Federal Reserve Chairman Jerome Powell said that given the current level of adoption of crypto assets like bitcoin, the asset class does not pose a serious existential threat towards reserve currencies such as the USA dollar.

Furthermore, looking at Bitcoin's Google Trends chart, the searches for the phrase "bitcoin" have significantly increased - from 41 to 100 - after Trump's tweets in the United States.

Bitcoin was created in 2008 as an alternative to currencies controlled by governments and banks.