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Donald Trump: If Facebook wants to become a bank, they must be subjected to all banking regulations

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U.S. President Donald Trump expressed his views on cryptocurrencies, saying that not only was he “not a fan” of Bitcoin, he also believes Facebook’s Libra will have little standing or dependability when launched. He said that Facebook should be subjected to banking regulations both in the U.S. and globally.

Trump expands his opinion on cryptocurrencies taking a jab at Libra

After more than two years of silence on cryptocurrencies, U.S. President Donald Trump has finally shared his thoughts on the burgeoning new industry. And while his comments were nothing unexpected, the very fact he spoke about digital assets was seen as a clear sign that the industry is maturing.

Donald Trump: Bitcoin not money, value based on thin air, facilitates unlawful behavior

Related: Donald Trump: Bitcoin not money, value based on thin air, facilitates unlawful behavior

In a series of tweets posted on July 12, Trump said that he was neither a fan of Bitcoin nor of Facebook‘s “virtual currency,” which he believes will have very little “standing or dependability.” His knowledge of the matter seems limited, though, as he implied that the only way Facebook could issue Libra is to become a bank.

Trump explained that if Facebook, or any other company for that matter, want to issue cryptocurrencies and become banks, they would have to be subjected to banking regulations both in the U.S. and globally.

Starting a bank in U.S. is a regulatory hurdle which the tech giant was looking to bypass by merely offering a digital currency backed by USD. All banks, before commencing operations in the U.S., must get approval by the federal or state government via charter. The cumbersome process of starting a bank takes minimum one year, according to the Federal Reserve.

Banks are also allowed to get insurance from the FDIC ( Federal Deposit Insurance Corporation) and meet other regulations by Federal Reserve and other government agencies. New banks must have a solid team and sufficient funds to support themselves in case of losses and will be subjected to additional regulations while they’re still young.

Different countries have different banking regulations and operating an international bank will be a tough task for Facebook as it will have to abide by a plethora of various regulations.

Facebook is up for a tough summer

While it’s hard to say what the Trump administration was hoping to achieve with these comments, it certainly didn’t deter anyone from investing in cryptocurrencies. They were posted following a social media summit held at the White House, where Trump criticized tech giants such as Facebook, Twitter, and Google for their bias against political conservatism.

And while it’s unclear whether the topic of cryptocurrencies was discussed, it’s safe to assume that Facebook was most likely mentioned. Many Reddit users even speculated that the tone of the tweet implied that the government was gearing up to push more regulation into the space.

Trump’s comments come less than 24 hours after the chairman of the U.S. Federal Reserve Jay Powell warned Congress about Libra. Powell said that Libra had “serious concerns” over privacy, consumer protection, financial stability, and money laundering to resolve before it launches.

Facebook is preparing for two separate hearings at the U.S. House Financial Services Committee and the Senate Banking Committee next week, and Trump’s comments might push the committees’ sentiment even further against Libra. With the G7 meeting just over a month away, where the topic of cryptocurrencies and blockchain technology will be discussed, a sudden drop in support will only spell trouble for Facebook.

Filed Under: , Libra, People of Blockchain, Regulation

Priyeshu Garg

Priyeshu is a software engineer who is passionate about machine learning and blockchain technology. He holds an engineering degree in Computer Science Engineering and is a passionate economist. He built his first digital marketing startup when he was a teenager, and worked with multiple Fortune 500 companies along with smaller firms. When he is not solving the transportation problems at his company, he can be found writing about the blockchain or roller skating with his friends.

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