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Facebook’s Libra: House and Senate’s PRs suggest increasing appetite for regulatory regimes




Facebook's Libra: PR from the House and the Senate speaks of increased appetite to form regulatory regime
Source: Unsplash

Apart from Bitcoin’s monumental rise recently, Libra has undoubtedly been one of the hottest topics in the cryptocurrency space. The coin that is expected to make its debut in the first half of 2020 saw the disapproval of several regulatory bodies as soon as it was introduced. It was once again placed in the spotlight after Peter McCormack asked Brian Quintenz, CFTC commissioner, questions with regards to the centralized cryptocurrency.

The host of WhatBitcoinDid pointed out one of the crucial difference between Bitcoin and Facebook’s Libra. McCormack stated that the decentralized nature of Bitcoin makes it hard to be controlled. However, when Facebook unveiled its cryptocurrency with the aim of making it a “global currency,” the House Financial Services Committee Chairwoman, Rep. Maxine Waters, called for a hearing on Facebook’s decision to launch a cryptocurrency on July 17.

McCormack highlighted that this stunt however, cannot be pulled with Bitcoin as it doesn’t have a single entity representing the coin, since Satoshi Nakamoto’s identity remains as mysterious as the Bermuda Triangle. This was followed by him asking the Commissioner about the things they have to do as regulators when there’s a centralized digital currency and a decentralized digital currency. To this, Commissioner Quintenz said,

“[…] I think there’s always an interest by people in whatever whatever profession they’re in, regulatory, legal, media to try to lump things together but the fact of the matter is there’s a huge diversification of innovation in the space with pure decentralization at one end and then kind of a centralized token at the other […]”

He went on to state that Facebook’s Libra could sound innovative and potentially have a global reach, taking the social media giant’s global presence into account. However, the Commissioner stated that to him, “they are incredibly different things.” He added,

“[…] the limits of government capabilities over the regulation of something that’s decentralized because there is no entity to regulate versus the government’s power to regulate something that is centralized that’s associated with an entity that is existing right now in a very charged political environment […]”

Nevertheless, the Commissioner assured that if at all in the future any entity wanted to list a futures contract or derivatives contract on Libra, then they would focus on the underlying features. He added that the Commission would look into the what the contract was settling against, whether it was physically settled through the exchange of the underlying token, how the token would be delivered to settle the contract and so on.

“The press releases […] from both the House and the Senate […] what it speaks to is an increased appetite to form a regulatory regime around crypto product. And we’ll see if that evolves and if so how? […]”

Further, on Facebook’s cryptocurrency being regulatory-compliant, the Commissioner said,

“[…] but I did read part of the white paper and their portion on compliance with a global regulatory financial complex is a page and a half long. I think they might need a little more than that in terms of the regulatory regime that currently exists let alone the one that may or may not be created if they launch that product”

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Priya is a full-time member of the reporting team at AMBCrypto. She is a finance major with one year of writing experience. She has not held any value in Bitcoin or other currencies.