In another blow to Facebook's Libra currency, Representative Sylvia Garcia (D-TX) published a statement in which she rejected the potential for a status change on the Libra coin project. The rejection follows the submission of an updated Whitepaper by Libra developers. The news showcases the distrust many lawmakers still have towards major social media networks that desire to enter the crypto sector.
In an April 16 announcement, Garcia explained that her intention is to continue to make sure that the SEC regulates all potential securities, no matter their type. In the statement, Garcia explains that according to the Howey Test, Libra still falls under current securities regulations. Specifically, she pointed out that the new whitepaper didn't change the fact that Libra derives value from a basket of currencies that are subject to change based on the actions of the Libra Association.
The statement comes as another blow to Libra developers who have had a rough go at the project ever since it entered the spotlight back in June 2019. At that time, Facebook was already under intense scrutiny for multiple privacy violations and meddling allegations surrounding the last presidential election. Consequently, the push-back for the project has been intense.
For example, regulators' concerns boiled over into action last year when Maxine Waters (D-CA), Chairwoman of the Financial Services Committee put the brakes on the project. Waters halted the project to allow regulators to get a better understanding of the concept and its effects on the financial markets. Notably, Facebook CEO Mark Zuckerberg testified before congress to help explain his firm's strategy. Not surprisingly, not many lawmakers were swayed by his performance.
If the name Sylvia Garcia sounds slightly familiar to you, there are a couple of reasons why. For one, She and Veronica Escobar became the first Latina congresswomen from Texas in 2018. Additionally, Garcia is active in the crypto regulatory sector. Last year, the representative sponsored the “Managed Stablecoins are Securities Act of 2019”. Importantly, Representative Garcia currently sits on the House Committee on Financial Services.
Libra – A Cloudy Future
Despite the fact that the Libra Project has nearly unlimited funds, the concept faces an uphill battle. Despite all the hurdles, it appears as if Facebook has no intention of dropping the concept in the near future. In fact, it looks as if the project is taking on a more flexible approach. In this way, you may see more Whitepaper alterations to suit regulatory requirements as developers try to appease regulators.
What if Libra Launches
If, or when, the Libra project goes active, it will represent a huge milestone for the entire crypto sector. The currency would place crypto wallets and coins directly in the hands of billions of users. Analysts predict the event could be the catalyst for a crypto revolution. Despite the high hopes, there are still many in the crypto community expressing concern over the project due to the potential for a lack of decentralization and complete destruction of privacy.
It’s a Waiting Game
You have to imagine that Facebook plays the long game on this project. They understand that the political landscape changes frequently, and you could even see them weighing in heavily on future elections to ensure a better response moving forward. For now, it doesn't look like Libra managed to warm any hearts at the Financial Services Committee as of yet.