US lawmakers tell Facebook to halt Libra

Libra could lead to an entirely new global financial system intended to rival the dollar

US lawmakers demanded in an open letter addressed to Facebook that the company puts developments of the cryptocurrency Libra to a stop as it could lead to “an entirely new global financial system that is based out of Switzerland and intended to rival US monetary policy and the dollar.”

“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 stated, along with urging that Libra raises “serious privacy, trading, national security, and monetary policy concerns for not only Facebook’s over two billion users, but also for investors, consumers, and the broader global economy.”

The letter was signed by Representative Maxine Waters and four House Democrats. According to it, although Facebook had released a white paper on Libra and Calibra, information on the intent, roles, use, and security of these was not relayed, which “exposed the massive scale of the risks and the lack of clear regulatory protections”. If these products weren’t regulated properly, they could “pose systemic risks that endanger US and global financial stability.” Waters had suggested at such an act previously after Facebook shed light some light on Libra.



Facebook has faced in the past such as the Cambridge Analytica incident where the firm was able to access information on over 50 million Facebook users without their consent. “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.



The letter came shortly after Facebook allegedly briefed Congressional aides about the project. On July 2, an anonymous House Democratic aide wrote in an article for The American Prospect that legislative aides had met with Facebook executives, including Libra’s head of policy, who laid out different aspects of the project, for instance, Facebook’s goal to launch Libra by 2020 and peg the Libra to a basket of currencies. S/he said that Facebook executives “kept suggesting” that a 2020 launch represented a “prolonged timeline”, but that it “didn’t seem lengthy to anyone in the room”. S/he also mentioned that Facebook said they had assumed the Federal Trade Commission or the Consumer Financial Protection Bureau would regulate Libra. According to him/her, when asked for details about the basket of currencies, the executives’ answers were “fairly vague.”

Last month, the US Senate Committee on Banking, Housing, and Urban Affairs said that it would arrange a hearing on Libra, called “Examining Facebook’s Proposed Digital Currency and Data Privacy Considerations” on July 16. The committee had addressed an open letter to Facebook in May in order to find out more about Libra, including how it functions and to what extent the company had consulted regulators and market watchdogs. Soon after, Waters revealed that the House Financial Services Committee would also hold a hearing on Libra on July 17.

This article originally appeared on Medianama.