Hours after Facebook unveiled its new cryptocurrency “Libra”, Democratic Rep. Maxine Waters requested that the tech giant pause development on the project. Chair of the House Financial Services Committee, Waters is asking company executives from Facebook to testify before Congress to help satisfy questions and concerns about security and data privacy.
In a statement, Waters calls Facebook’s move into cryptocurrency an “unchecked expansion”.
“Facebook has data on billions of people and has repeatedly shown a disregard for the protection and careful use of this data. It has also exposed Americans to malicious and fake accounts from bad actors, including Russian intelligence and transnational traffickers. Facebook has also been fined large sums and remains under a Federal Trade Commission consent order for deceiving consumers and failing to keep consumer data private, and has also been sued by the government for violating fair housing laws on its advertising platform.
With the announcement that it plans to create a cryptocurrency, Facebook is continuing its unchecked expansion and extending its reach into the lives of its users. The cryptocurrency market currently lacks a clear regulatory framework to provide strong protections for investors, consumers, and the economy. Regulators should see this as a wake-up call to get serious about the privacy and national security concerns, cybersecurity risks, and trading risks that are posed by cryptocurrencies.
Given the company’s troubled past, I am requesting that Facebook agree to a moratorium on any movement forward on developing a cryptocurrency until Congress and regulators have the opportunity to examine these issues and take action. Facebook executives should also come before the Committee to provide testimony on these issues.”
Also on Tuesday, Representative Patrick McHenry, addressed Waters in a letter asking for a hearing on Facebook’s Libra.
“Unlike existing digital currencies, Facebook has a worldwide platform and scale that can impact global payments and the digital currency markets.”
“It is incumbent upon us as policymakers to understand Project Libra. We need to go beyond the rumors and speculations and provide a forum to assess this project and its potential unprecedented impact on the global financial system.”
Unlike digital currencies, such as Bitcoin, which function in decentralized environments and are not controlled or operated by central entities governed by governments, Facebook and its blockchain initiative Calibra, a wholly-owned subsidiary, is subject to US laws, regulations and global policies.
Senator Sherrod Brown, the top Democrat on the Senate Banking Committee, added,
“Facebook is already too big and too powerful, and it has used that power to exploit users’ data without protecting their privacy. We cannot allow Facebook to run a risky new cryptocurrency out of a Swiss bank account without oversight.”
The Libra Association, a consortium of powerful companies that will oversee the cryptocurrency project, was established by Facebook as an independent, not-for-profit membership organization headquartered in Geneva, Switzerland.
Reuters reports that Switzerland’s financial watchdog said it was in contact with the initiators of the Libra project but declined to comment on whether it was obtaining specific regulatory permission or status.
Detractors across the globe are also sounding the alarm bell on Libra, including French Finance Minister Bruno Le Maire and Markus Ferber, a senior German lawmaker in the European Parliament who is calling on the European Commission to build a clear regulatory framework for cryptocurrencies.