Facebook has a warning for those in Washington determined to derail the company’s plans for creating a cryptocurrency: doing so would be a huge win for China.
David Marcus, the executive leading the company’s libra initiative, said Beijing is ploughing ahead in trying to stand up a digital payments system with global reach even as US officials try to figure out how to regulate Facebook’s coin. Chinese progress could represent a real threat to US influence, Marcus said on Thursday.
“The future in five years, if we don’t have a good answer, is basically China rewiring” a large part of the world “with a digital renminbi running on their controlled blockchain”, Marcus said. He warned about the prospect of “having a whole part of the world completely blocked from US sanctions and protected from US sanctions and having a new digital reserve currency” with no alternative.
Marcus’s comments come as Facebook struggles to persuade sceptical lawmakers and regulators that libra is a good idea. Facebook’s June announcement that it had begun work on the cryptocurrency along with 27 partners sparked controversy that has led to congressional hearings, reviews by global regulators and even a Twitter rebuke from President Donald Trump.
Facebook has previously highlighted threats posed by China as part of a response to Washington’s concerns over the company’s reach. When CEO Zuckerberg testified before congress in April 2018, he prepared notes to argue that China would be strengthened by a breakup of US tech companies.
While the head of China’s central bank has said the country had no timetable for issuing its own digital currency, officials have signalled that they are taking research and development efforts seriously. A former leader of the bank, who started its crypto project, said a goal was to keep China from having to adopt a standard, like bitcoin, designed and controlled by others. — Reported by Ben Bain and Kurt Wagner, (c) 2019 Bloomberg LP