In a letter to Facebook, the US Senate is requesting detailed information about the social media network’s cryptocurrency ‘GlobalCoin’ which is set to launch in the first quarter of 2020.
According to the official request dated May 9th, the Senate Banking Committee has held its first hearing on privacy rights and data collection in a digital economy.
“Earlier this year, the Senate Banking Committee’s Chairman and Ranking Member invited feedback on the collection, use and protection of sensitive information by financial regulators and private companies in light of the immense growth and use of data for a multitude of purposes across the economy.
As the Committee moves forward with additional hearings to build the record for legislation, it is important to understand how large social platforms make data available that can be used in ways that have big implications for consumers’ financial lives, including to market or make decisions on financial products or services that impact a consumer’s access to or cost of credit and insurance products, or in ways that impact their employment prospects. It is also important to understand how large social platforms use financial data to profile and target consumers.
The Wall Street Journal recently reported that Facebook is recruiting dozens of financial firms and online merchants to help launch a cryptocurrency-based payments system using its social network. Last year, Facebook asked U.S. banks to share detailed financial information about consumers. In addition, privacy experts have raised questions about Facebook’s extensive data collection practices and whether any of the data collected by Facebook is being used for purposes that do or should subject Facebook to the Fair Credit Reporting Act.”
The Committee asks Zuckerberg to respond to seven questions that will give them a better understanding of how the world’s largest social networking platform is planning to power a digital economy for its 2.5 billion active monthly users. More specifically, the questions try to ascertain whether or not Facebook’s new initiative will behave lawfully with respect to how it safeguards and handles private and sensitive data.
- How would this new cryptocurrency-based system work, and what outreach has there been to financial regulators to ensure it meets all legal and regulatory requirements?
- Does Facebook have any information bearing on an individual’s (or group of individuals’) creditworthiness, credit standing, credit capacity, character, general reputation, personal characteristics or mode of living that is used (either by Facebook or an unaffiliated third party) to establish eligibility for, or marketing of a product or service related to, (1) credit, (2) insurance, (3) employment, or (4) housing?
- How does Facebook ensure that information being on an individual’s (or group of individuals’) creditworthiness, credit standing, credit capacity, character, general reputation, and/or personal characteristics is not used in violation of the Fair Credit Reporting Act?
Facebook will outline its plans in more detail this summer and is expected to provide insight on its mission to launch GlobalCoin throughout a dozen countries by 2020. Operating under the codename ‘Project Libra’, Facebook’s new crypto payments system has been registered in Geneva, Switzerland, reports Reuters.
According to a BBC report, the company has spoken to the Governor of the Bank of England, Mark Carney, as well as officials in the US Treasury, to understand the risks involved in launching a new crypto asset. Zuckerberg has also reportedly turned to his former Harvard classmates and rivals, the Winklevoss twins, who used their multi-million-dollar settlement from their Facebook lawsuit to invest in Bitcoin, ultimately building one of the most regulated and compliant cryptocurrency exchanges in the space: New York-based Gemini.
The new digital currency is designed to serve users regardless of whether they have a bank account. By partnering with banks and brokers, Facebook could use its upcoming cryptocurrency to facilitate international transactions.
The company is also reportedly in talks with several online merchants that may be able to accept the digital currency in exchange for lower transaction fees.