Since releasing its white paper, Facebook’s cryptocurrency project, Libra has stirred the attention of many policymakers in various countries, including the united states of America. The kind of attention that Libra has brought to the cryptocurrency industry has a positive side and a negative side.
How will Facebook’s cryptocurrency hurt the industry?
Most policymakers, including Chairwoman Maxine Waters, are of the idea that Libra should not be allowed to launch until regulators can come up with proper measures to scrutinize and manage the currency. With this kind of mistrust being projected by Lawmakers, there might be more stringent regulations being brought into the cryptocurrency industry.
Regulators in the US have expressed their worries regarding how Libra could be used to aid illegal activities. Regulators fear that it could be used to fund terrorists and also promote money laundering.
With Facebook having more than 2 billion users as of 2019, it will be able to attain mass adoption of its currency, which could impair the existing financial systems in several countries. Not many countries are willing to let a digital currency destabilize their traditional financial systems; hence, they will be looking for more ways to regulate the entire crypto market.
Most people fear that the new regulations may go too far into limiting how the market currently operates. Officials including the secretary to the treasury, Steven Mnuchin have already hinted that there may be new regulations coming into inaction in the US.
For quite a long time, the cryptocurrency industry has been an unregulated sector, and that’s one of the main reasons that has helped it to bloom over a short period. Introducing regulations into a space that has significantly been unregulated may cause issues as most people have already established their networks over the existing unregulated system.
The United States senate’s committee on banking, housing and urban affairs will tomorrow the 30th of July, hold a hearing to discuss regulatory frameworks for digital currencies and blockchain. This hearing that will affect the entire crypto market comes after the senate held another hearing on Libra. Whatever transpires in that meeting will seal the fate of the cryptocurrency industry in the USA.
What good has Libra brought to the crypto industry?
Besides the hurt that Facebook’s cryptocurrency, Libra brings into the cryptocurrency industry, it also brings with it some good. Libra is pushing lawmakers to clarify the guidelines upon which cryptocurrencies should operate on in the USA. This way, investors and other traders will know what to avoid while trading and what’s expected of them with items such as tax payments. This will prevent scenarios like where the IRS recently shocked cryptocurrency traders with letters asking them to pay taxes.