Facebook’s Libra continued to grace the headlines, with high-stakes questions regarding its potential risks continuing to dominate the news. Libra’s extensive scrutiny had corrected the crypto-market significantly, with rumors suggesting that the contentious project would lead to tighter regulatory surveillance over Bitcoin and the cryptocurrency industry.
If the latest Senate Banking Committee hearing is any evidence, it can be concluded that Senators were not really sold on the idea of “businesses providing permissioned services on top of permission-less networks,” despite David Marcus’s attempts to reassure them otherwise.
Stephen Palley, a partner at the Washington-based law firm Anderson Kill, noted that regulators are not comfortable with the process of tightening the screws on the on and off-ramps. Palley tweeted “words of an anonymous friend” about the key issues with Libra. According to the lawyer’s tweets, Libra association would potentially be under “enormous pressure” from regulators, something which is not good news for Bitcoin. He added,
“If the Association loses this fight, the implications for Bitcoin and Ethereum are obvious: it would create a clear AML double-standard.”
He further said,
“Why should a Coinbase user be permitted to send funds to a permission-less wallet when a Libra user cannot? If Libra loses, the crypto community should expect regulators to tighten the screws even further on Bitcoin and Ethereum.”
Palley also pointed out that Bitcoin would only grow if there are on-ramps, emphasizing the easy ways to globally purchase and trade cryptocurrencies, a large proportion of which was facilitated by the controversial Tether.
If the stablecoin succumbs to regulatory clampdown by lawmakers, this would subsequently cause huge liquidation problems for cryptocurrencies. Besides, an eventual ban on crypto-transfers between regulated exchanges and non KYC-compliant wallets would cause a major setback to the ecosystem’s scaling.