Finally we seem to have a bipartisan consensus in Washington. Both parties are terrified of new private money, and they want to regulate it out of existence. The near universal fear and loathing by government officials of these so-called cryptocurrencies is all the more reason they should exist.
A cryptocurrency is a privately sponsored and operated form of money that is not supplied by government. Bitcoin has already been traded for years, but the new leading horse is the multibillion-dollar Libra, which Facebook is creating.
A Wall Street Journal headline last week expressed worries of government officials: “Facebook Faces Broad Resistance to Crypto Plans.”
Last week’s congressional hearing on cryptocurrencies revealed broad agreement that U.S. regulators and policymakers must force cryptocurrency companies to comply with, as the Journal put it, “a panoply of regulations governing risks, money laundering, terrorism financing and evasions of sanctions.”
Meanwhile, European Union officials say that private money could risk igniting “financial instability” in global markets. The White House has also voiced skepticism.
Rep. Maxine Waters, the chairwoman of the powerful House Financial Services Committee, has called on Facebook to “agree to a moratorium on any movement forward on a cryptocurrency until Congress and regulators have the opportunity to examine these issues and take action.”
Thank God the internet didn’t face this kind of universal resistance, or we would all still be using dial-up modems. What is everyone in government so afraid of? The one-word answer is competition. Cryptocurrencies challenge the state’s stranglehold monopoly on fiat money. This could diminish the authoritative powers of arrogant and fallible central banks. Germany’s finance minister has even admitted that cryptos should be stopped so they don’t in any way challenge the supremacy of the euro.
Before refuting some of these concerns, for full disclosure, I should note that I recently became an investor and economic consultant with Decentral, a California-based crypto that will tie its currency to the dollar.
Author: Stephen Moore