Crypto Decline Accelerates Just Prior To Mark Zuckerberg Testifying In Congress

Facebook will not move forward without explicit approval from US regulators
US regulatory approval will ruin any chance Libra had to be bitcoin competitor
Libra platform created a period of attention on crypto space
Crytpo and Bitcoin Market Cap Story of Day

Crytpo and Bitcoin Market Cap Story of Day

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CRYPTO STORY OF THE DAY

Facebook (FB) Has Put An Indefinite Pause On Their Launch Of Libra - Positioning The Project As A Cryptocurrency Instead Of The Payment Network That It Was, Has All But Killed The Company's Finance Ambitions Before The Platform Was Even Able To Launch

In his prepared remarks to Congress, FB CEO Mark Zuckerberg has plainly stated that the company would not move forward without explicit approval from US regulators. Furthermore, in the address, Zuckerberg says that the company is not, ‘the ideal messenger’ for being the purveyor of a fast, cheap and easy global payments system. Even more so that consumers, 'wish it was anyone but [Facebook] putting [the idea of such a payment system] forward.'  The news follows a rapid deterioration in the prospects of the project over the last two weeks. In a Financial Times article yesterday, a major European bank CEO speculated that launching Libra would likely impact Facebook's global banking relationships. 

Crypto Takeaway: As Zuckerberg outlines in his prepared remarks, Facebook has had a tough couple of years for a variety of reasons and this will be his second trip to 'the Hill' in the last ~18-months. In light of that difficult period, with elevated scrutiny, we could never understand why the company decided to present Libra, which held the most similarities to a payment network (WeChat, Venmo), in a crypto-wrapper. The combination of existing concerns around the company's data-policies combined with their ambitions in the little-understood world of crypto created a political and media frenzy that the company clearly believes threatened its core business.

As crypto participants, we are not overly concerned with this development. For starters, we never saw enough detail about Libra to suggest it would become a meaningful crypto onramp. Furthermore, while the platform created a period of attention on the space, it did just as much to confuse the general population about the nature of cryptocurrency. While Zuckerberg will not go as far as outright declaring the Libra project dead today, stating that it will not move forward without implicit US regulatory approval ruined any chance it had of becoming a bitcoin competitor.

About the Author

FRNT Financial is an Institutional Brokerage which offers clients a variety of products along with research & analytics in the crypto-space.