U.S. lawmakers continued to express concern about Facebook’s planned cryptocurrency payment system this week, officially asking Facebook to agree to an immediate moratorium on all Project Libra development In a letter to Facebook executives, House Financial Services Committee Democrats cited concerns about oversight, consumer protections, and security, as well as the potential risk to financial stability.
The letter, addressed to Facebook CEO Mark Zuckerberg, COO Sheryl Sandberg, and Project Libra head David Marcus, suggested that the Libra cryptocurrency and Calibra digital wallet “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 argued that Facebook’s white paper provides few details about the “intent, roles, potential use, and security” of Libra and Calibra, but the information it does provide “exposes the massive scale of the risks and the lack of clear regulatory protections.”
The letter noted that Facebook’s wallets could potentially store trillions of dollars of user funds that would lack the protection of federal depository insurance – funds that could be vulnerable to hackers. Lawmakers also expressed concerns that the platform could be used to facilitate criminal activity like money-laundering.
Finally, the Committee’s letter cited Facebook’s own “troubled past” on issues related to user privacy and data protection, fake accounts, and legal accusations that the company has used its advertising algorithms to violate fair housing laws. Lawmakers concluded with a formal request for a suspension of the project:
“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. 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.”