I never thought I'd find myself in absolute agreement with US president Donald Trump. Whether it's a sign of a changed man or just simply the law of averages, Trump's latest Twitter tirade has, for the most part, shown a remarkable degree of foresight.
Yesterday, Trump spent part of his evening expressing his unsolicited take on cryptocurrencies, arguing that the likes of bitcoin are valued "based on thin air" and are responsible for a rise in drug trafficking and other illegal activities. He also took a swipe at Facebook's new crypto project Libra, which he argues will have "little standing or dependability" unless it is subject to banking regulations.
It's worth noting that I have always been in favour of cryptocurrencies, at least in concept. The notion of an alternative to traditional banking could prove to be revolutionary, and the spirit of crypto greater control over money and better access to financial services for more of the world's population is still a commendable worthwhile vision.
Yet, whether it's a genuinely held belief or the opinion of someone whispering in his ear, Trump is right in his cynicism of crypto. Bitcoin, in particular, has proved too volatile to be useful as a long term payment method and, let's face it, is only celebrated by those who were shrewd enough to invest early. In fact, I was unable to suppress a shudder when I read this week that the Winklevoss twins, brothers who raked in a fortune from the surging price of bitcoin, had congratulated Mark Zuckerberg on the Libra project with the message: "Welcome to the party".
When it comes to Trump's comments on Libra, however, the issue is less about volatility and more about a lack of trust. Trump is right when he says the Libra Association needs to be subject to regulations if it's to have any clout though I suspect our reasoning differs somewhat. Regardless of your attitude towards current banking regulations, at least they enforce some semblance of accountability for new companies entering the market.
The Libra Association, with its plans to connect billions of users around the world with a virtual currency, currently sits outside the jurisdiction of any authority. There is no oversight governing what it can and can't do, or dictate what sort of services and terms it can offer. That may be welcomed by those that celebrate the decentralised nature of bitcoin, but, for me, that's troubling. Let's not forget, the Libra Association is covered in the stink of a social media company that has, over the course of a single year, comprehensively destroyed its reputation and eroded all trust in its platform.
This deliberate attempt to avoid scrutiny is what I have issue with. I simply don't trust a project of this kind to protect an individual's data and money, and it seems that regulators across the globe don't either. There are already reports that the project could be blocked in India, and the US Federal Reserve is calling on a halt to its development until risks can be assessed. Facebook likely anticipated this backlash, which is possibly why the project was announced in advance of its 2020 launch date.
One Libra investor perhaps put it best when he told CNBC that many countries are "freaked out about the ruthless amoral Facebook vampire squid having its tentacles jammed into their countries control of currency and banking systems". This is from a guy who is actively supporting its development.
On this one issue, Trump is absolutely right. I never thought I'd say those words.
