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Federal Reserve Throws Water On Facebook’s Crypto Dreams

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Federal Reserve Chairman Jerome Powell told Facebook to pump the breaks on its cryptocurrency plans, citing a number of red flags about the impending launch of the social network's upcoming Libra. Strange Currencies In June, Facebook announced it would launch its very own cryptocurrency, called Libra. The currency would not be fully controlled by Facebook, and instead would be run by a coalition of companies including Stripe, Uber, Mastercard, Visa, PayPal and Spotify as well as the nonprofit Switzerland-based Libra Association. Facebook further signaled its dedication to the project by launching Calibri, a new subsidiary that would create a wallet for the Libra coin. The plan was to launch in next year, but that’s (crypto)currently not looking so likely. What’s The Hold Up? You’re likely aware that Facebook has been embroiled in its share of scandals lately, and its public goodwill is fast evaporating. Coupled with the problems that Bitcoin, crypto’s most high-profile e-cash company, has been having, and it is no surprise that regulators are a bit skittish. In a Congressional committee meeting earlier this morning, Powell raised concerns about privacy, money laundering, consumer protection, financial stability — all issues the crypto community is still working through. Powell said the project can’t go forward until Facebook has addressed these weak spots, and called for a Libra oversight that is “careful one, not a sprint to implementation.” Bit by Bit Cryptocurrency has captured the imagination of investors and financial analysts, with some calling Libra a validation for crypto-currency and a sign that it will go mainstream. Maybe. And Facebook could no doubt use a win these days. But for now red tape, regulator concerns and the still sketchy reputation crypto has in the public eye (there’s just so much money laundering) suggests it’s not ready for prime time just yet. -Michael Tedder Photo: Brendan McDermid/Reuters