Investing.com - Cryptocurrencies traded lower on Tuesday as Facebook (NASDAQ:FB) was called to Congress to testify on plans for the launch of its digital coin Libra.
Total cryptocurrency market capitalization fell to $280.23 billion by 11:06 AM ET (15:06 GMT), compared to $292.38 billion a day earlier.
Bitcoin fell 1.4% to $10,409.2 on the Investing.com Index, Ethereum lost 5.8% to $217.40, XRP slid 4% to $0.30629, while Litecoin declined 5% to $86.852.
At the time of writing, David Marcus, who heads the Facebook (NASDAQ:FB) division overseeing the Libra launch, was testifying to the Senate Banking Committee.
Facebook has been under regulatory siege since it announced plans to launch its own alt coin, and U.S. Treasury Secretary Steve Mnuchin on Monday warned that the company will face much tighter regulatory scrutiny if it ever offers digital financial services, saying that it “must implement the same anti-money-laundering safeguards in countering the financing of terrorism as traditional financial institutions”.
Mnuchin’s comments echoed a tweet from U.S. President Donald Trump who came out last week with an attack on cryptocurrencies in general. In the same thread, he warned that “if Facebook and other companies want to become a bank, they must seek a new banking charter and become subject to all banking regulations”.
Commenting on Facebook’s appearance before Congress, Allianz (DE:ALVG) Chief Economist Mohamed El-Erian showed little surprise at the scrutiny.
“Due to money laundering risks, it was a matter of time until ‘crypto’ initiatives - such as Facebook’s Libra - triggered a regulatory response,” he explained. “Advocates must convince politicians that, rather than ‘currencies’, such initiatives can be a well- monitored part of the payments eco system.”
In his testimony, Marcus sought to do just that while assuring U.S. lawmakers that it plans to hold off on the launch until regulatory concerns are fully met.
“Digital currencies, such as that of Libra, can fit within a regulatory compliant framework in the U.S. today,” he said, while also suggesting that current regulations were creating an unnecessary obstacle to progress.
“Many banks have tried to fix the slumbering payment system and some are attempting to create their own blockchain-based alternative systems, but regulatory barriers have slowed the progress of these projects to a crawl comparatively,” Marcus warned.