The chairman of the U.S. Federal Reserve called for a stop to Libra, Facebook’s proposed cryptocurrency, until the project better demonstrated how it was going to address issues like money laundering and privacy, according to a report by Reuters.
Jerome Powell testified before the U.S. House of Representatives Financial Services Committee on Thursday (July 11), and his comments caused a slide in bitcoin value, which fell 7.7 percent, to $11,164.
“Libra raises many serious concerns regarding privacy, money laundering, consumer protection and financial stability,” Powell said.
This loss in value follows a 3.8 percent dip after his Wednesday testimony about monetary policy. Bitcoin was last down 4.5 percent. Other cryptocurrencies, like Ethereum and Ripple, saw similar slumps.
“This is a direct response to the Powell testimony and comments on Facebook’s Libra and the implications that could have for the entire cryptocurrency space,” said Craig Erlam, senior market analyst at FX trading platform OANDA.
Libra has drawn scrutiny from regulators and governments worldwide, who all share similar concerns regarding money-laundering and privacy issues, as well as the effect the currency could have on the traditional financial system.
Other analysts say the big jumps in value for cryptocurrencies simply follow the pattern of how they react in the market, and double-digit daily moves are common.
When Facebook announced Libra on June 18, bitcoin jumped 55 percent in value in nine days, reaching almost $14,000 in value.
In response to Libra, the Group of Seven (G7) nations recently called for an investigation into the supposed risks of cryptocurrencies and how they would affect the current financial system.
Libra also caught the attention of The BoE, the U.K. Treasury and the Financial Conduct Authority, who have all had meetings about the implications of Libra and its potential consequences on the U.K.
Mark Carney, the governor of the Bank of England, said he had an “open mind” when it came to Libra, but the launch would not be an “open door,” and it would have to live up to the “highest standards.”
Carney explained that if Libra is immediately popular with users “it would instantly become systemic and will have to be subject to the highest standards of regulation.”
Carney also shared similar fears of money laundering and said rules needed to be put into place to make sure Libra had “operational resilience,” which meant safeguards against things like cyber attacks and lack of privacy control.