Donald Trump: If Facebook wants to become a bank, they must be subjected to all banking regulations
United States President Donald Trump expressed his views on cryptocurrencies, saying that not only was he “not a fan” of Bitcoin, he also believes Facebook’s Libra will have little standing or dependability when launched.
U.S. President Donald Trump expressed his views on cryptocurrencies, saying that not only was he “not a fan” of Bitcoin, he also believes Facebook’s Libra will have little standing or dependability when launched. He said that Facebook should be subjected to banking regulations both in the U.S. and globally.
Trump expands his opinion on cryptocurrencies taking a jab at Libra
After more than two years of silence on cryptocurrencies, U.S. President Donald Trump has finally shared his thoughts on the burgeoning new industry. And while his comments were nothing unexpected, the very fact he spoke about digital assets was seen as a clear sign that the industry is maturing.
In a series of tweets posted on July 12, Trump said that he was neither a fan of Bitcoin nor of Facebook‘s “virtual currency,” which he believes will have very little “standing or dependability.” His knowledge of the matter seems limited, though, as he implied that the only way Facebook could issue Libra is to become a bank.
Trump explained that if Facebook, or any other company for that matter, want to issue cryptocurrencies and become banks, they would have to be subjected to banking regulations both in the U.S. and globally.
….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…
— Donald J. Trump (@realDonaldTrump) July 12, 2019
Starting a bank in U.S. is a regulatory hurdle which the tech giant was looking to bypass by merely offering a digital currency backed by USD. All banks, before commencing operations in the U.S., must get approval by the federal or state government via charter. The cumbersome process of starting a bank takes minimum one year, according to the Federal Reserve.
Banks are also allowed to get insurance from the FDIC ( Federal Deposit Insurance Corporation) and meet other regulations by Federal Reserve and other government agencies. New banks must have a solid team and sufficient funds to support themselves in case of losses and will be subjected to additional regulations while they’re still young.
Different countries have different banking regulations and operating an international bank will be a tough task for Facebook as it will have to abide by a plethora of various regulations.
Facebook is up for a tough summer
While it’s hard to say what the Trump administration was hoping to achieve with these comments, it certainly didn’t deter anyone from investing in cryptocurrencies. They were posted following a social media summit held at the White House, where Trump criticized tech giants such as Facebook, Twitter, and Google for their bias against political conservatism.
Just came from the White House Social Media Summit where I had chance to stand alongside @realDonaldTrump and talk about why we need to stop Big Tech from discriminating against conservatives #Section230 #SocialMediaSummit pic.twitter.com/LJ0Ig7GWDo
— Josh Hawley (@HawleyMO) July 11, 2019
And while it’s unclear whether the topic of cryptocurrencies was discussed, it’s safe to assume that Facebook was most likely mentioned. Many Reddit users even speculated that the tone of the tweet implied that the government was gearing up to push more regulation into the space.
Trump’s comments come less than 24 hours after the chairman of the U.S. Federal Reserve Jay Powell warned Congress about Libra. Powell said that Libra had “serious concerns” over privacy, consumer protection, financial stability, and money laundering to resolve before it launches.
Facebook is preparing for two separate hearings at the U.S. House Financial Services Committee and the Senate Banking Committee next week, and Trump’s comments might push the committees’ sentiment even further against Libra. With the G7 meeting just over a month away, where the topic of cryptocurrencies and blockchain technology will be discussed, a sudden drop in support will only spell trouble for Facebook.