Written by Malik Corbett
Today is a big day for the crypto-world as U.S. lawmakers grill Facebook executive David Marcus about company’s proposed Libra cryptocurrency project. Despite calls from institutional advocacy groups such as the Chambers of Digital Commerce for regulatory guidance; until now, the government has been slow to react to the fast growing developments of cryptocurrency and blockchain technology. Lawmakers in Washington DC took a wait and see approach. However on June 18th, Facebook announced the Libra project via white paper and all that changed.
What woke up the sleeping Giant?
Until now, U.S regulators seemed unbothered by the rise of cryptocurrency until a major tech giant, Facebook, which has a huge global network effect, decided to launch its own stablecoin and validate the nascent but powerful technology. The launch of Libra by Facebook is probably one of the most pivotal moments of 2019.
When combine Facebook’s ability to galvanize billions of people across their ecosystem with cryptocurrency; you have the potential to usurp the current monetary reserve of the world; the US dollar. Monetary reserves is a broad category which includes physical paper and coins, money market shares, savings deposits, and other items that are regulated by the central bank. The central bank holdings allow for the regulation of the nation’s currency and money supply, as well as manage the transactions within global markets. In other words, the U.S ability to maintain its dominance as a global power, hinges on the ability for our government to control the world’s currency reserves. For this reason, I predict that either Facebook will either have to change its business model to be a bank fully integrated into the financial system or this project will not see the light of day under its current form.
One thing is for sure, all eyes will be on Capitol Hill Tuesday and Wednesday as the government deliberates on the fate of the Libra project.