Libra, Facebook’s venture into cryptocurrency, has caused quite a stir since its launch announcement in June 2019. To date, U.S. lawmakers have asked Facebook to immediately halt their plans until the Congress has an opportunity to examine the risks that Libra coin poses to consumers. In an open letter to top Facebook executives, the House Financial Services Committee urged them to “immediately agree to a moratorium on any movement forward” on Libra. The lawmakers cited Facebook’s prior controversies on privacy, trading, security, and monetary policy concerns.
The open letter states that Facebook’s Libra is a threat to U.S. monetary policy and the USD. “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.” It added, “Failure to cease implementation before we can do so, risks a new Swiss-based financial system that is too big to fail.”
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Facebook’s announcement boasted that Libra will shake up the global P2P payments market by creating a cryptocurrency for cross-border transaction settlements at very low cost. They are setting up a Swiss non-profit foundation to manage the currency and are working with top technology companies like Uber, Spotify, Visa and Mastercard, each who have pledged to invest at least $10 million in the project. Currently, Facebook is walking on thin ice with Libra cryptocurrency as both the House Financial Services Committee and the Senate Banking Committee have scheduled hearings in mid-July to further discuss the issues.
With the 2020 presidential election about 16 months away, some of the hopefuls are causing a stir. Elizabeth Warren, a Democratic senator and presidential candidate, addressed the topic of Libra on Twitter. She tweeted, “We need to hold them accountable — not give them the chance to access even more user data.”
The move by Facebook to launch Libra has gotten much criticism from regulators and institutions. Facebook responded by saying that they look forward to working with lawmakers as the process moves forward, including answering their questions at the upcoming House Financial Services and Senate Banking Committee hearings, but it’s not just the United States that wants a closer look. The U.K.’s Financial Conduct Authority and G7 have announced plans to scrutinize the Libra project as well. This hostile stance from lawmakers suggests that Facebook will face serious criticism and in-depth hearings from several government committees, both in the U.S. and abroad.
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