Facebook should put a stop to Libra for now, says Congress
Many have highlighted the cybersecurity implications of Facebook’s forthcoming Libra cryptocurrency, but Congressional lawmakers in the US have an even greater fear: could the grand initiative undermine the security of the global financial ecosystem itself?
That’s what’s keeping members of the US House of Representatives Committee on Financial Services up at night. On Tuesday, Chairperson Maxine Waters sent a letter to Facebook and Calibra, the subsidiary developing the Libra digital wallet, fretting about the global dangers of the cryptocurrency and asking them to stop developing it for the time being.
The letter worries that Libra could compete with the dollar and US monetary policy. It warned:
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 29-page white paper that Facebook published on Libra doesn’t provide nearly enough information, warned the Committee. It called for time to consider the initiative’s implications:
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.
Senators are also worrying about Libra. The Senate Committee on Banking, Housing, and Urban Affairs had already written to Facebook, on 9 May, before the social media giant officially announced the project, asking it for more information. In the UK, the Financial Conduct Authority is also concerned about the cryptocurrency’s potential effects.
So what do we know about Libra? Facebook’s white paper says that the cryptocurrency, created by the Switzerland-based Libra Association, will run on an open source blockchain software developed by Facebook. Financial institutions including Mastercard, Paypal, and Visa will support it and doubtless profit from the venture, although Facebook is taking a leadership role for now.