News of the launch of Facebook cryptocurrency Libra has highlighted how the US government will respond to the introduction of new digital currencies.
The Wall Street Journal is reporting that the Federal Reserve and the Senate Banking Committee will both closely scrutinize the implementation of Libra.
On Wednesday (June 20), Fed chairman Jerome Powell said that the country’s central bank has “significant input into the payments system,” which is the eCommerce system that Libra will affect. Powell also said that regulators have jurisdiction to enforce anti-money laundering regulations on business that operate within the digital sphere.
“We will wind up having quite high expectations from a sort of safety and soundness and regulatory standpoint if they do decide to go forward with something,” Mr. Powell said.
Libra is going to be a stablecoin, which means that unlike Bitcoin, it is tied to actual currency and financial companies like Uber and eBay. Facebook said the coin is meant to facilitate online payments for the unbanked population of the world.
Powell said Facebook has been in contact with the Fed about Libra, as well as other regulators across the globe. “It’s something we’re looking at,” he said
Libra won’t, he said, displace the current currency system, or complicate monetary policy. “I think we’re a long way from that,” he said.
It isn’t always easy for regulators to deal with cryptocurrencies, which don’t necessarily adhere to rules wr
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