• The confluence of interests against Libra has been swelling and this decree represents the levee break.
• Lawmakers are unlikely to backtrack with so much riding on the banking ecosystem and the architecture that underlies it.
• So many powerful people and organizations, firmly entrenched in the establishment, stand to lose so much with Libra's adoption that this will not be a clean fight.
The United States Congress just requested a moratorium on Libra through a formal letter to Mark Zuckerberg and Facebook itself. This is not surprising by virtue of the difficulties that Facebook has been having and the overall sense of distrust that the social media juggernaut has been amassing in the last few years. Half of the lawmakers are fairly well convinced that Facebook's ineptitude led to Russian bots infiltrating their system and influenced many millions of Americans to make a presidential decision that was deleterious to the power of their party. Compound this with the many banking industry lobbyists and backers that propel many of these politicians into Washington and provide very thick linings to their re-election coffers led to this moratorium being a virtual certainty that many in the cryptocurrency space predicted quite a while ago.
There are many ways that Libra could have a seismic impact on the world fiat system as we know it today and most all of them involve the diminishing influence of current banking interests. The node holders of Libra are largely credit card processors and tech-heavy companies that are more interested in Libra as a technology play than a banking play. Companies that are firmly entrenched in the banking world appear to be more interested in penalizing those that purchase Bitcoin through Coinbase, Localbitcoins, or other channels than coming to terms with the writing on the wall that cryptocurrencies are a force to be reckoned with and very likely here to stay.
The US House of Representatives committee on financial services is very unlikely to find anything particularly influential about what Facebook may have to say about Libra that could sway them. Their fundamental plans outlined in their white paper layout how they want to make use of many ATM devices that will enable users to purchase Libra with ease, much in a way that people do at present-day ATMs at unnecessary and exorbitant expense.
The node holders being Visa, Mastercard, PayPal, and other financial behemoths are certainly powerful but against the whole financial ecosystem, they hold very little proportional sway. It's interesting that the House committee is focusing on Switzerland as a point of contention when many banking interests exist today have at least one major branch in the banking haven by virtue of the ease of attaining very flexible banking licenses and the permissibility of banking activities that are unavailable in other more strict jurisdictions. Most multi-national corporations have a branch in Ireland, Switzerland, or other more favorable jurisdictions where they can park their cash and take advantage of the enticingly low corporate income taxes. With Switzerland, the perception is that this country, in particular, is where you go if you have something to hide. This is very much like the negative press that Bitcoin was pegged with for so many years because of their being tied with the Silk Road and other dark web marketplaces that transacted in illicit goods.
One valid point that Congress gets resoundingly right is that Facebook's record on privacy has abysmal. Couple that with the reality that with Libra they would be holding, along with the 27 node holders, the ledger responsibilities for many billions of dollars USD worth of crypto leads many to rightly be concerned. We found out several months back that Facebook held a great many passwords of their users on an unsecured .txt file on one of the computers of a lower-level employee, among other sloppy security measures being practiced. For a multi-billion-dollar company that has access to the brightest minds in the U.S. and through an HB1 Visa, virtually every genius in the world, these types of cybersecurity improprieties are by no means acceptable.
The resolution to this is very likely not going to be clean cut. Facebook may have to substantially alter their designs in favor of a much more watered down Libra that's still is a payment solution but must maintain a tightly-connected tether to the existing banking system. Libra’s privacy provisions are virtual nil so taking a few steps back in favor of existing banking architecture doesn't substantially shift the use case that is being presented. That being said, there's a lot that needs to be ironed out between lawmakers and Facebook that have no quick resolution.