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Facebook’s Libra faces hurdles as US legislators circulate bill with $1 billion daily worth of fine

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The cryptocurrency world took a sharp intake of breath following a series of tweets by the President of the United States, President Donald Trump.

His tweets contained nothing new as relating to the worldwide acceptance of cryptocurrencies, as many people are sceptical and are obviously distrustful towards the technology. What caused the uproar was this rejection coming from his Office.

As the President of the United States of America, his words have an influence on the decisions of many things.

His tweet, which put Bitcoin and other Cryptocurrencies as the subject, revealed that he was not in support of the technology based on its volatility and it being another avenue to facilitate illegal activities.

He went on to mention Facebook’s Libra, quoting it as a “virtual currency” which will have little standing or dependability.

He ended his thread by saying that the United States Dollar (USD) will always remain the most dominant currency anywhere in the world.

One of the biggest computer minds in the world and a supporter of Bitcoin and some altcoins, John Mcafee, has tweeted a two minute and eleven seconds video in response to the US President, which probably made some cryptocurrency investors breathe easier, but it is interesting to note that many American citizens supported Mr Trump’s tweets.

This apparently virtual support might play a hindering role in Libra’s acceptance.

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This, however, is not the only potentially effective blow to Libra.

Large Markets

Facebook’s Libra might not be launched in India in the nearest future.

A Facebook spokesperson disclosed to The Economic Times that the company has “no plans to offer Calibra in India”. This decision is due to “local restrictions within India that made a launch of Calibra not possible at this time.”

India, being the world’s second-most populous country in the world, is one of Facebook’s largest markets and would have made the global penetration of the cryptocurrency easier. Its restrictions would mean less acceptance of Libra, even though the statement insinuated that the restrictions are time-bound.

Options

Despite the above listed possible hindrances to Libra’s penetration in the world markets, there might be other avenues through which Libra might gain unavoidable acceptance by users.

First is the consortium of supporting organizations controlling the Libra blockchain. These organizations, which include Facebook and 28 others like Mastercard, Coinbase, eBay, and PayPal etc., offer worldwide services and are part of the everyday lives of their users. They will, no doubt, constitute avenues for Libra’s acceptance.

Another option is the news that Facebook might soon roll out new apps to the public, from its New Product Experimentation (NPE) Team. The average person loves anything new, especially tech, and this would be another point of attraction. If Libra is automatically made the payment method for these apps, and the users are not offered other options, they might have to bend to accept Libra.

Calibra and Libra

But…America

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Apart from the tweet by its President, and the no-go-area India presents, the U.S. has proposed barring big tech companies from offering financial services and digital services and “the proposal has been circulated for discussion by the Democratic majority that leads the House Financial Services Committee,” reports Reuters.

The bill which proposes that “A large platform utility may not establish, maintain, or operate a digital asset that is intended to be widely used as medium of exchange, unit of account, store of value, or any other similar functions, as defined by the Board of Governors of the Federal Reserve System,” still has to go through different points before acceptance, and it is expected that the Republican would oppose it.

The “Keep Big Tech Out Of Finance Act” defines ‘large’ as a company mainly offering an online platform service with at least $25 billion in annual revenue. This definition and the proposition leaves no doubt that Facebook is under attack, and this tells of the many rejections Libra should expect.

The Bill is said to have an aim to separate tech from finance, and comes with a fine of $1 Billion daily if violated.

Facebook Libra by Luno

Conclusion

The bill’s aim is obviously unrealistic, considering the steady growth of fintechs, and spells a lack of innovative embrace, but it might be strong enough to give Libra a chokehold, considering the subtle truth that when America sneezes, the world freezes. This hold, coupled with the loss of India’s market, might cause slower growth in acceptance of Libra.

Time alone will reveal the actual happening for Libra which is expected to be launched next year.

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