U.S. Federal Reserve Chairman Jerome Powell said on Wednesday that Facebook’s plan to build a digital currency called Libra “cannot go forward” until serious concerns are addressed, comments that pressured the project and dented the price of the original cryptocurrency bitcoin, according to Reuters.
The strong comments from the most powerful U.S. financial regulator underscored the growing regulatory hurdles facing the proposed cryptocurrency, which has drawn scrutiny from policymakers globally.
“Libra raises many serious concerns regarding privacy, money laundering, consumer protection and financial stability,” Powell said during his semi-annual testimony on monetary policy before the U.S. House of Representatives Financial Services Committee.
“I don’t think the project can go forward” without addressing those concerns, he added later.
Powell said any regulatory review of the project should be “patient and careful.” He noted that existing rules do not fit digital currencies.
“It’s something that doesn’t fit neatly or easily within our regulatory scheme but it does have potentially systemic scale,” he said. “It needs a careful look, so I strongly believe we all need to be taking our time with this.”
“We are very much aligned with the Chairman around the need for public discourse on this,” Facebook spokeswoman Elka Looks said in an email. “This is why we along with the 27 other Founding Members of the Libra Association made this announcement so far in advance, so that we could engage in constructive discourse on this and get feedback.”
Powell’s comments about Libra hit the price of bitcoin, which fell as much as 7% during his three hours of testimony.
„Though Libra has met with fierce resistance from central banks and supervisory authorities and might never see the light of day, in many other cases tech firms (both start-ups and established big players) have successfully captured bits and pieces of universal banks’ traditional value chain. This trend may only intensify in the coming years. In this environment, European banks remain squeezed.”