US Congress Tells Facebook to Pull the Brakes on Libra’s Development

The United States House of Representatives Committee on Financial Services demands from Facebook and its partners to stop the development of the Libra cryptocurrency stablecoin.

This is just the latest hurdle in Facebook’s path to making Libra a globally accepted digital currency. Regulators across the board have been coming out one after the other against Libra. However, this might be the greatest threat to the stablecoin that Facebook has faced to date.

In an open letter to Facebook, the committee asked the social networking company to halt all development of their new crypto stablecoin Libra until the Financial Services Committee and affiliated subcommittees hold hearings to determine how it would operate and what protections would be implemented for user privacy.

This is the list of all official representatives who signed the letter addressed to Facebook CEO Mark Zuckerberg, the head of the company’s crypto unit David Marcus, and COO Sheryl Sandberg:

• Maxine Waters (D-CA), Chairwoman of the House Financial Services Committee
• Carolyn Maloney (D-NY), Chair of the Investor Protection, Entrepreneurship and Capital Markets Subcommittee
• William Lacy Clay (D-MO), Chairman of the Housing, Community Development and Insurance Subcommittee
• Al Green (D-TX), Chairman of the Oversight and Investigations Subcommittee
• Stephen F. Lynch (D-MA), Chairman of the Task Force on Financial Technology

Rep. Waters has been advocating a halt of Libra’s development ever since its whitepaper was released. However, this is the first time she has done so in a formal capacity.

There are two major concerns that have been noted in the letter. One is Facebook’s track record when it comes to protecting their users’ private data. Facebook has had over a dozen scandals in the last year alone where they’ve manipulated, leaked, sold or collected their users’ data without their consent.

Another major concern raised in the letter is the possible economic impact of Libra and what future it holds in terms of its global acceptance. Regulators fear that with Facebook’s massive resources behind Libra, it could possibly give Facebook a monopoly over the global economy. Proper checks and regulations need to be put in place to ensure that Libra is held accountable and remains in control of regulatory bodies.

The lawmakers write in the letter:

“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.”

Facebook Libra Could “Endanger U.S. and Global Financial Stability”

The letter also states that while Facebook has released the whitepaper for Libra, very little information has been provided about the intent, roles, potential use, and security of Libra and Calibra which leaves lawmakers unable to provide proper regulatory protections to consumers.

The lawmakers go on to say:

“If products and services like these are left improperly regulated and without sufficient oversight, they could pose systemic risks that endanger U.S. and global financial stability. These vulnerabilities could be exploited and obscured by bad actors, as other cryptocurrencies, exchanges, and wallets have been in the past.”

Facebook has to yet to respond to the demands listed in the letter.