There are even more calls for strengthening censorship and regulation in the United States, and more than 30 organizations, including the American Consumers Association and the Economic Policy Institute, have asked members of Congress to intervene in the project.
The US Senate Banking Committee and the House Financial Services Committee will hold hearings on “Libra” on July 16 and 17, respectively. Dong Yizhi, an investment finance lawyer at Shanghai Yida Law Firm, told the 21st Century Business Herald that he is not optimistic about the prospects of Libra. Because of its challenge to the status of the legal currency and its lack of security, stability and credit, the United States continues to stop. The project is more likely.
Libra was "siege"
According to the report, the draft legislation “Let large technology companies stay away from finance” mentions that large service platforms should not be used to establish, maintain or operate “widely used as a medium of exchange, a unit of account, a value store or any other similar function”. assets. Although the proposal may face many challenges in the US Congress and it is difficult to get enough votes, it is a strong signal from legislators about the technology giants in the financial services field.
Last week, US President Trump shelled cryptocurrencies, including Bitcoin, saying that these were not currencies, and their value fluctuated greatly and was illusory. He warned that unregulated crypto assets could fuel illegal behavior, including drug trafficking and other illegal activities. Trump also criticized the Libra project, saying that if Facebook wants to become a bank, it should apply for a banking license and be bound by all banking regulations.
Just the day before Trump made the remarks, Federal Reserve Chairman Powell warned that unless Facebook addresses privacy, money laundering, consumer protection and financial stability, its cryptocurrency Libra plan should not advance. He said that the Federal Reserve and the US Treasury's Financial Stability Oversight Committee are paying attention to Libra. The Fed has set up a working group for the project and is coordinating with central banks in other countries.
Federal Reserve Vice Chairman Quars pointed out that although the size of the current crypto assets is not enough to raise concerns about financial stability, Facebook's participation may change this situation. Facebook has a daily active population of 1.56 billion, which means that Libra may be widely used once it is launched.
Regulators believe that so far, Facebook has not provided enough technical details for Libra, such as how it will prevent money laundering, and how much companies such as PayPal will control Libra. “Libra's biggest problem is that there is no real innovation, and there are no technical details. For example, what assets are used to anchor value and how revenue is settled. These operations are complex and require cross-government cooperation for a company. It is difficult to achieve.” Dong Yizhi, an investment finance lawyer at Shanghai Yida Law Firm, told the 21st Century Business Herald.
Dong Yizhi is not optimistic about Libra's prospects. He believes that because of its challenge to the status of the legal currency and its lack of security, stability and credit, the United States is more likely to stop calling the project. Although some countries are currently more open to Libra, Libra is less likely to continue from the perspective of several big countries.
Dong Yizhi believes that the “global” digital currency that Facebook hopes to establish is difficult to achieve. The challenge is to face different regulatory regulations and standards from all over the world, and rush to launch a financial system that will impact many countries. If Libra finally launches, the big probability will be out of the original format, and the variant will become a product like “Q-coin” that “self-entertainment”, circulating in the body, its function is even less than “WeChat”.
According to reports, the Securities and Exchange Commission (SEC) staff is investigating Libra's structure. If the SEC determines Libra's design to become an ETF (Exchange Traded Fund), Facebook will need SEC approval to start the project.
"At present, the biggest difficulty in Libra's supervision is that its legal nature and status are difficult to determine. After it is determined, it can be further regulated by relevant departments." Dong Yizhi told reporters that Libra is different from traditional business in that it has both currency attributes and fundraising functions. Coupled with the possibility of more application development in the follow-up, multi-sectoral joint regulation in the United States is a high probability event.
Yang Yanchao, an associate researcher at the Institute of Law of the Chinese Academy of Social Sciences, said in an analysis of 21st Century Business Herald reporters that countries have different attitudes toward cryptocurrencies. Germany and Japan are open to cryptocurrencies, and their status is first approved by legislation, while Zimbabwe bans everything and cryptocurrencies. Related financial activities. The US states and law enforcement agencies have different understandings of cryptocurrencies. At present, they are mainly regarded as three kinds of attributes: new currency, virtual property, and securities. Such cognitive differences have also led to ambiguity in supervision.
It is reported that the US Senate Banking Committee and the House Financial Services Committee will hold hearings on “Libra” on July 16 and 17, respectively, and Marcus, head of Facebook digital wallet Calibra, will testify. In a letter to parliamentarians, he said he hopes the government, central bank, regulators, non-profit organizations and other stakeholders will participate in the Libra program. Despite this, people still worry that Libra's power is more or less difficult to constrain.
The concerns of all parties are not without foundation. A 2018 study by the University of Technology in Sydney found that about a quarter of Bitcoin users and nearly half of Bitcoin transactions involve illegal activities. The study estimates that about $76 billion in illegal activities worldwide each year involve bitcoin, close to the size of the illicit drug market in Europe and the United States. Cryptographic currencies are also often targeted by hackers. According to a Ciphertrace report, in the first eight months of 2018, hackers stole nearly $1 billion from cryptocurrency exchanges.
Yang Yanchao pointed out to the reporter that the market value of cryptocurrency once reached one-twentieth of the global gold reserve. This shows that the development and growth of cryptocurrency represented by bitcoin has its rationality. Since it relies on the technical means based on blockchain technology, the simple prohibition is not realistic. In the future, the government should construct a set of supervision system and reasonably guide it to supplement the centralized currency.
Bitcoin prices fluctuated again
Bitcoin initially rose nearly 7% after Trump slammed the cryptocurrency, but soon retreated all the gains. Since last Friday, Bitcoin has fallen more than 15%. On July 15, Bitcoin fell sharply, and according to CoinDesk data, it briefly fell below $10,000 to $9872. As of 20:00 Beijing time, the price of Bitcoin was US$10,308, down 3.85%.
The analysis believes that the call for enhanced regulation of cryptocurrencies is high, and Trump’s pressure of repression is a major factor in the decline of Bitcoin. Alfonso Esparza, senior market analyst at Oanda, believes that triggering Trump's attack means that Bitcoin is likely to fall further to $8,000, taking back all of June's gains.
However, in the eyes of some people, Trump has finally begun to express his views on cryptocurrencies, which is not bad news. Thomas Lee, head of research at Fundstrat, a market research organization, believes that Trump’s criticism shows that cryptocurrencies are indeed on the “central stage” today. Congress, the Federal Reserve, and the President are all concerned that bitcoin prices are expected to rise to $20,000 to 4 before the end of the year. Ten thousand U.S. dollars.
"The current price trend is more like the normal correction in the early days of the bull market." A currency circle observer told the 21st Century Business Herald that the bitcoin price trend has shown two characteristics this year. One is the shock and the previous one. The cycle is similar. Before the next high point, there will be a period of turbulence adjustment. Second, the prices of other mainstream cryptocurrencies other than Bitcoin have not risen. Bitcoin has gradually increased in the total market value of cryptocurrency. It has risen from about 35% at the end of 2017 to 66% on the 15th of the month.
In the bull market in 2017, the price of bitcoin rose from less than $1,000 to nearly $20,000. It is widely believed that it is mainly driven by retail investors, and the latest round of growth is somewhat more mature. However, Zhao Changpeng, CEO of Bitco, the world's most traded bitcoin and cryptocurrency exchange, pointed out that this round of gains may not be driven by institutional investors as expected. He told the media that he did not see institutional investors growing faster, and the number of institutions that entered Bitcoin in 2019 did not increase significantly. Retail investors still account for about 60% of the currency transaction volume, which is roughly the same as last year. However, the volume of transactions between institutions and retail investors has increased.
Despite the recent decline, Bitcoin has risen more than 160% since the beginning of the year, which is not unrelated to the fact that Facebook and other giants are involved in this field. Thomas Lee believes that Facebook's Libra project can play a role in attracting new Bitcoin investors, but its influence is limited, and Libra's success will not change the prospects of Bitcoin.