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LIBRA ON THE HILL
On Wednesday morning, Facebook CEO Mark Zuckerberg testified in front of the United States House of Representatives Committee on Financial Services about Facebook’s role in developing libra, a cryptocurrency backed by a basket of stable international assets and designed to be spendable anywhere in the world.
Facebook’s Libra Association, a coalition of companies that will oversee the project, is struggling as it faces growing skepticism and regulatory uncertainly surrounding the new cryptocurrency. It has lost seven of its largest partners in less than a month: PayPal, Visa, Mastercard, Stripe, Mercado Pago, Booking Holdings and eBay. 21 members of the group still remain, including Uber, Spotify and Vodafone. And although Zuckerberg has pledged to cooperate with regulators, there is still red tape to negotiate and politicians to appease before libra can be launched.
Zuckerberg appeared before the committee ostensibly to provide an update and more clarity on plans for Facebook’s libra cryptocurrency, but he never clearly explained how Facebook is expecting to profit from libra, and, if the project isn’t about money, why it’s taking on such a complex project at all.
Not everyone was convinced by Zuckerberg’s testimony: Congressman Brad Sherman of California dismissed cryptocurrency as technology that is only useful for criminals, and warned that these new types of assets have the potential to threaten the U.S. dollar’s dominance over the global financial system. And committee chairwoman Maxine Waters didn’t hide her contempt in her opening statement:
“It would be beneficial for all if Facebook concentrates on addressing its many existing deficiencies and failures before proceeding any further on the libra project,” she said.
With libra in the spotlight, bitcoin sank to a five-month low on Wednesday. Prices fell to $7,307.39, their lowest level since May 18. At this point, the world’s largest cryptocurrency by market value had lost nearly half of its value since reaching nearly $14,000 in June.
Jeff Dorman, chief investment officer of asset manager Arca, said that “increased regulatory scrutiny” drove the sale of bitcoin and other cryptocurrencies in the hours leading up to the hearing.
But bitcoin regained those losses and much more with a meteoric rise Friday. It rallied nearly 40% in a 24-hour span, briefly exceeding $10,000> late Friday night for the first time in more than a month before settling back to a little more than $9,000.
RIPPLE CEO: FACEBOOK HAS A ‘DEFICIT OF TRUST’
Ripple CEO Brad Garlinghouse weighed in on the issue, telling FOX Business on Wednesday that Facebook “deficit of trust” has hurt the libra project. Garlinghouse also chastised Zuckerberg for telling Congress libra is a way to extend America’s financial leadership: “Last I checked it is based in Switzerland.”
Ripple announced on Tuesday that it is opening an office in Washington D.C., which according to company officials makes it the first and only cryptocurrency and blockchain company in the industry with an office devoted to government and regulatory affairs.
Plus: Ripple’s XRP has added some 30% to its price since the end of September.
In other news, this week also brought the announcement that a coalition of major accounting firms are teaming up with ConsenSys, Microsoft, and others to create a risk assessment tool that provides accountants, auditors, CFOs, and compliance leads with guidance to evaluate digital assets and blockchain technology.
HTC now has an entry-level blockchain phone [The Verge]
Casa Is Helping Bitcoin Investors Pass on Their Holdings When They Die [CoinDesk]
Binance to Launch Venus Cryptocurrency [Bloomberg]