Donald Trump has launched a stinging attack on cryptocurrencies, including Facebook’s proposed Libra coin, and warned that the social media network might be subject to full banking regulation if it is to launch the project.
France also appears to be opposed to Facebook’s plans, ahead of G7 meeting next week that will be hosted by Bruno Le Maire, the French finance minister.
The US president said in a series of tweets on Thursday that he was “not a fan” of cryptocurrencies including bitcoin, adding that they were “not money” and facilitated illegal activity.
“Similarly, Facebook Libra’s ‘virtual currency’ will have little standing or dependability,” he added. “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 and International.”
On Friday, an official at France’s finance ministry said the country would not allow a private group to set up the equivalent of a national currency. “We will not allow private enterprises to give themselves the attributes of state sovereignty . . . the means of monetary sovereignty,” the official said, ahead of the G7 meeting where cryptocurrencies and cyber security are expected to be on the agenda.
French officials say a currency such as Libra issued by a company with hundreds of millions of customers would carry unacceptable systemic risks. They say they are also concerned about money laundering and the financing of terrorism.
Facebook has been criticised by lawmakers and regulators for its plans to shake up the global payments market by creating a cryptocurrency designed to facilitate domestic and low-cost international money transfers instantaneously.
The company is setting up a Swiss non-profit foundation to manage the currency together with other technology groups, including Uber, Spotify, Visa and Mastercard, each of which has pledged to invest at least $10m in the project. However, major banks have shunned the Libra project over regulatory fears and worries the move could interfere with their own cryptocurrency efforts.
Mr Trump’s comments on the project come a day after Jay Powell, the chairman of the US Federal Reserve, warned that Libra could not progress unless the social media group resolved “serious concerns” over “privacy, money laundering, consumer protection and financial stability”.
The Fed and the US Treasury’s Financial Stability Oversight Council are also looking at Libra, Mr Powell said.
On Friday, Japan’s Bitpoint became the latest cryptocurrency exchange to report a suspected hacking attack, as it reported the unauthorised withdrawal of $32m in company and customer funds.
Facebook is bracing for hearings next week at both the US House financial services committee and the Senate banking committee to discuss the project.
A person involved in Libra’s regulatory efforts said they were expecting the hearings to go “badly” and focus largely on data privacy.
Earlier on Thursday, Mr Trump held a social media summit at the White House — attended by a number of far-right commentators — in which he criticised tech platforms such as Google, Facebook and Twitter for alleged bias against conservative voices.
The president said at the event that he was calling a “big meeting” in the next few weeks for the big tech platforms who would “have to come”, and that he would direct his administration to “explore all regulatory and legislative solutions to protect free speech”.
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