Last month, Facebook took the crypto world by storm by releasing the whitepaper for its Libra cryptocurrency. As Facebook is planning to launch Libra in early 2020, lawmakers are making sure that it not an easy road for the social media giant.
Soon after the Libra whitepaper release, US lawmakers attacked Facebook expressing their concerns over the project. Ahead this month on July 16-17, Facebook is already scheduled for congressional hearings. But in a recently published letter, privacy and consumer watchdogs in North America have asked the Congress to halt Facebook’s Libra developments.
There are nearly 30 lawmakers from different departments signing the document. They write:
“We call on Congress and regulators to impose a moratorium on Facebook’s Libra and related plans until the profound questions raised by the proposal are addressed”.
These regulators put several questions and concerns over the impact of Libra on the world economy. Hence the signatories say that before Facebook proceeds with the development, they need to clear some things. The document states:
“The plan for Libra makes explicit and implicit promises to consumers – such as the claim that value will remain stable – but what is to stop the Libra Association from changing policy in order to, for example, degrade the value of Libra or to impose a microtax on every Libra transaction?”
The House Financial Services Committee Chair Maxine Waters has also raised doubts over Facebook’s ability to execute such a huge project. Waters said that looking at Facebook’s past mismanagement to handle user data and privacy, there’re a lot of things for the company to answer.
Concerns Over Privacy
In this letter, the signatories have joined to support Maxine Waters and put questions on Facebook’s shady past. The lawmakers wrote:
“It appears that these products may lend themselves to an entirely new global financial system that is based out of Switzerland and intended to rival U.S. monetary policy and the dollar. This raises serious privacy, trading, national security, and monetary policy concerns for not only Facebook’s over 2 billion users, but also for investors, consumers, and the broader global economy”.
The lawmakers added that in the Libra whitepaper, Facebook provides scant information on how it would address regulatory concerns. They add that if products and services like these are given an easy pass without assessing its implications, they could pose a potential threat to the global financial system. The letter states: “These vulnerabilities could be exploited and obscured by bad actors, as other cryptocurrencies, exchanges, and wallets have been in the past.”
“Because Facebook is already in the hands of a over quarter of the world’s population, it is imperative that Facebook and its partners immediately cease implementation plans until regulators and Congress have an opportunity to examine these issues and take action,” the letter said. “During this moratorium, we intend to hold public hearings on the risks and benefits of cryptocurrency-based activities and explore legislative solutions. Failure to cease implementation before we can do so, risks a new Swiss-based financial system that is too big to fail.”