Steven Mnuchin, United States’ Treasury Secretary is ‘fine’ with the launch of Facebook’s digital currency Libra. The caveat, however, is that the digital currency will have to be compliant with money laundering and financial stability norms.
According to an updated report by Bloomberg, quoting the Treasury Secretary, Libra has just got a lifeline. Interestingly, this comes months after the digital currency project was called a ‘national security threat,’ by Mnuchin. The report stated that the secretary has had “a dozen,” meetings with Facebook concerning regulations. He stated,
“I’m fine if Facebook wants to create a digital currency, but they need to be fully compliant.”
The comments by Mnuchin were made in Washington D.C., in response to a question from lawmakers. Among other topics discussed, the treasury secretary also stated that a digital version of the US dollar is unlikely in the near future, despite the development of a sovereign digital currency by China and Europe. He stated,
“[Federal Reserve Chairman Jerome] Powell and I have discussed this – we both agree that in the near future, in the next five years, we see no need for the Fed to issue a digital currency.”
Interestingly, these “regulatory concerns,” have “slowed down,” Facebook’s progress in their development or rollout of Libra. Since regulators began hitting back at Libra, Facebook has indefinitely delayed the launch of the digital currency by over a year.
Libra was announced in June 2019, but has not been received well by regulators. Germany and France have banned the currency before its launch, while other national regulators have spelled out their concerns regarding monetary policy manipulation, money laundering and terrorism financing.
This is perhaps the most positive piece of regulatory news for Facebook, from the upper echelons of the United States administration. Previously, Powell, Mnuchin himself, President Trump and even several lawmakers stated that Libra could destabilize the dollar’s power in the global economic landscape.
Although the details of the “meetings” between Mnuchin and Facebook have not been made public, the concern of Libra competing with the dollar could have been one of the main topics of discussion. Given that several lawmakers were concerned about Libra’s threat to the dollar, the Facebook digital currency only holds 50 percent of the greenback in its reserve and the self-governed Libra Association controls the composition of the fiat-backing, a dollar increase may have been tabled.
Regardless, heading into 2020, the hopes of Libra, which many rescinded to the ash-heaps of crypto-history have been revived.