Mounting Facebook Libra pressure spurs Bitcoin slump
Facebook's digital coin is branded "a national security risk" as Bitcoin price falls by more than 10%
The value of Bitcoin dropped more than 10% in the wake of intensifying scrutiny levied at Facebook's own contentious cryptocurrency project from US regulators.
The social media giant's Libra coin was declared a "national security risk" by the US treasury secretary Steven Mnuchin, as he lumbered all cryptocurrencies under one umbrella and claimed they facilitate crime.
"To a large extent, these cryptocurrencies have been dominated by illicit activity and speculation," Mnuchin said in a White House press conference. He added he wasn't comfortable today with the idea of Facebook launching a cryptocurrency, and that the firm had a lot of work to do.
"Cryptocurrencies such as Bitcoin have been exploited to support billions of dollars of illicit activity, like cybercrime, tax evasion, extortion, ransomware, illicit drugs, and human trafficking," he said. "Many players have attempted to use cryptocurrencies to fund their malign behaviour."
The treasury secretary also clarified that preventing bad actors from using cryptocurrencies was his number one priority in terms of regulating digital payments. Facebook, as well as other companies, he continued, had a long way to go before they could convince the US administration they have reached that place.
Experts last month also claimed Libra has fundamental design flaws that could permit third-party data sharing, with the fledgeling cryptocurrency expected to come under the scrutiny of the US Senate Banking Committee today.
Facebook announced its cryptocurrency in June as a means to allow its billions of users to send and receive payments without the need for a banking intermediary. The token differs from Bitcoin, in that it's a stablecoin, and is targeted at individuals who are unable to access traditional banking.
In the wake of mounting scrutiny levied against Libra from government officials, however, the price of Bitcoin fell approximately 11% between Friday and Monday, where it hit a low of $9,855. The most widely-recognised digital coin has risen in stature over the last several months, after languishing at less than $3,000 as recently as March this year.
Mnuchin's comments have also been delivered in the wake of a scathing assessment of blockchain-powered digital currencies from the US President Donald Trump last week. Trump tweeted he was "not a fan" of Bitcoin and other cryptocurrencies, and that Facebook's Libra coin "will have little standing or dependability".