Treasure Secretary Says Libra Is a National Security Issue -- Does Mnuchin Have a Point?

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source: Pixabay

The U.S. Treasury Secretary Steven Mnuchin expressed serious concerns Monday about Libra, the currency proposed by Facebook, saying that it was a national security issue.

According to Mnuchin, Facebook has a long way to go until it secures approval from the authorities to launch Libra in the United States. In Mnuchin view, the social media giant should first convince the financial regulators that it could ensure high privacy standards.

In addition to that, Facebook should also make sure to enact reliable safeguard measures to prevent money laundering and other illicit uses of Libra, Mnuchin asserted.

In sum, Facebook needs to present the same guarantees that it would implement money laundering as the traditional financial institutions, Mnuchin concluded without giving any regulatory timeline for the approval of Libra.

His statement went viral only a few days after President Trump tweeted that Libra lacked dependability. After the end of the social media summit Trump hosted last week he admitted he was not a fan of crypto-currencies as in his view, they were not money. Trump also added that the lack of regulation in the field of crypto-currencies could facilitate unlawful behavior.

Congress would begin Tuesday a two-day-hearing on the Libra plans of Facebook, starting with the Senate Banking Committee. At the same time, the House Judiciary subcommittee would extend its investigation on the market power of the tech giants Facebook, Google, Amazon, and Apple.

David Marcus, the Facebook executive in charge of the Libra project, commented that the main aim of the social media firm is to develop a safe, secure, and affordable way to transfer money. Marcus also pointed out that the company was not in a hurry to launch Libra and emphasized the importance of full regulatory compliance. 

Facebook defined Libra as ''a stable coin''  secured by deposits in sovereign currencies such as the U.S. dollar, the Euro, as well as the Japanese yen. In an attempt to address rising privacy concerns, Facebook along with its partners Spotify, Uber, Visa, and PayPal, established a nonprofit oversight association to govern Libra.

In addition to that, Facebook also set up Calibra, a ''digital wallet'' subsidiary to develop the Libra technology separately from the social media branch. Marcus pointed out that despite Facebook owns and controls Calibra, it would not be able to access any financial data from it.

What do you think? Do you support or oppose the view that Facebook would manage to ensure the data privacy of the potential Libra users?