Democrats in the House of Representatives officially called on Facebook to halt its plans to establish its Libra cryptocurrency, arguing that regulators and Congress need to weigh in before it comes online in 2020.
The House Financial Services Committee wrote a letter to Facebook CEO Mark Zuckerberg, Chief Operating Officer Sheryl Sandberg, and Libra co-creator David Marcus demanding an “immediate moratorium on the implementation of Facebook’s proposed cryptocurrency and digital wallet.”
“Because Facebook is already in the hands of over a 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 lawmakers wrote in the letter. “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.”
The letter was signed by Financial Services committee chair Rep. Maxine Waters (D-CA), along with Rep. Carolyn Maloney (D-NY), Rep. William Lacy Clay (D-MO), Rep. Stephen Lynch (D-MA) and Rep. Al Green (D-TX).
— Financial Svcs Cmte (@FSCDems) July 2, 2019
Facebook released a white paper outlining their plans for Libra in June. The company hopes to create a currency that will allow payments to travel around the world. Its Calibra wallet app is meant to be accessible to the 1.7 billion people around the world who don’t have a bank account.
Libra has more establishment support than a cryptocurrency like Bitcoin. It has some major backers, including Paypal, Visa, and Mastercard, but it’s not clear what agency (if any) would regulate a global currency.
“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,” the Democrats wrote in their letter to Facebook. “These vulnerabilities could be exploited and obscured by bad actors, as other cryptocurrencies, exchanges, and wallets have been in the past. Indeed, regulators around the globe have already expressed similar concerns, illustrating the need for robust oversight.”
Waters initially weighed in on Libra within hours of the white paper, asking for a moratorium on development then — though Tuesday’s letter makes the request official. Her committee will hold a hearing on Libra on July 17.
The Republican-led Senate Banking Committee will hold its own Libra hearing on July 16, where Marcus is expected to testify. Republicans have also expressed skepticism about Libra; Rep. Patrick McHenry, senior Republican on the House Financial Services Committee said there were “many open questions” about the cryptocurrency and that “it is incumbent on us as policymakers to understand Project Libra.”
“We look forward to working with lawmakers as this process moves forward, including answering their questions at the upcoming House Financial Services and Senate Banking Committee hearings,” a Facebook spokesperson said in a statement.
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