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Bashing Bitcoin: Why Trump should reserve judgment on cryptocurrencies, including Facebook’s Libra

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So what’s behind President Trump’s Thursday evening, out-of-the-blue Twitter attack on cryptocurrencies? His dislike was pretty definitive. Trump disputed that they’re anything like money and accused them of facilitating crime. And he didn’t let Facebook’s Libra off the hook, either, saying it will have “little standing or dependability.” One of the president’s followers joked that he sounded like an investor who’d missed Bitcoin’s late 2018 low.

US President Donald Trump speaks during a “social media summit” meeting with prominent social media figures in the East Room of the White House in Washington, US, July 11, 2019. REUTERS/Carlos Barria

Of course, that’s probably not it. One obvious explanation is that Trump was echoing and expanding upon Federal Reserve Chairman Jerome Powell’s comments earlier in the day. Speaking to the Senate Banking Committee, Powell listed a number of concerns about Facebook’s virtual currency plan, including “privacy, money laundering, consumer protection, [and] financial stability.” (Sounds like Facebook has a lot of Washington work left to do here.)

Now Powell didn’t say Facebook would need to become federally chartered bank, as Trump said it would, but he did say Libra would be “immediately systemically important” and “subject to the highest level, the highest expectations in terms of prudential regulation.” (In the US, financial institutions designated as “systemically important” are subject to stress tests and must have resolution plans, among other things.) And while Powell said there needed to be a transparent evaluation process, Trump appears to have seen enough.

Another possibility is that Trump was a giving a nationalist hot-take on crypto. He just doesn’t see how any of this is in America’s interest. (Hey, Libra’s governing body will be based in Switzerland!) Sorry, bitcoiners but King Dollar is here to stay. Trump: “We have only one real currency in the USA, and it is stronger than ever, both dependable and reliable. It is by far the most dominant currency anywhere in the World, and it will always stay that way.” So maybe this was all a preemptive attack on a perceived potential rival to the dollar. Of course, to some of Trump’s crypto-loving fans, what he views as a bug they see as a feature.

Now the more cynical option here is to see the tweets as a mere extension of his ‘social media summit’ earlier in the day. Perhaps attacking Libra, will somehow alter how Facebook moderates content to the benefit of TrumpWorld. In any event, the criticism of Libra is premature, at best, given how it might be “yet another way capitalism helps the global poor,” as I recently wrote.

It also seems way too early write off crypto more broadly, especially if you’re an American president who wants as innovative an economy as possible. As tech analyst Benedict Evans argues, “Crypto today has a lot in common with both the internet in 1993 and the internet in 1999. Huge potential with few of the use cases invented yet, combined with froth, scams, and delusion. This makes it easier to dismiss. But dismissing crypto as a useless scam is much like looking at Usenet, Cuecat, and Boo.com and dismissing the internet. It mistakes applications for the enabling layer.”

The president should hold off judgment on crypto. Same goes for that other emerging technology, autonomous vehicles.



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