Facebook announced ambitious plans today to launch a new global cryptocurrency called Libra, part of an effort to expand into digital payments that immediately raised privacy concerns.
Both Republican and Democratic U.S. lawmakers joined policymakers across the globe who are concerned what Facebook’s decision to launch its own cryptocurrency could mean for data privacy and security.
House Financial Services Committee Chairwoman Maxine Waters (D-CA) today called for Facebook to halt its plans until Congress and regulators have had a chance to investigate potential risks.
“With the announcement that it plans to create a cryptocurrency, Facebook is continuing its unchecked expansion and extending its reach into the lives of its users,” said Waters. “Given the company’s troubled past, I am requesting that Facebook agree to a moratorium on any movement forward on developing a cryptocurrency until Congress and regulators have the opportunity to examine these issues and take action.”
Representative Patrick McHenry, the senior Republican on the House Financial Services Committee, also called for a hearing on the initiative, dubbed Libra.
“We know there are many open questions as to the scope and scale of the project and how it will conform to our global financial regulatory framework,” he wrote. “It is incumbent upon us as policymakers to understand Project Libra. We need to go beyond the rumors and speculations and provide a forum to assess this project and its potential unprecedented impact on the global financial system.”
Facebook’s announcement was met with immediate backlash from U.S. lawmakers and regulators across the globe, who are concerned that Facebook is already too massive and careless with users’ privacy.
“Facebook is already too big and too powerful, and it has used that power to exploit users’ data without protecting their privacy. We cannot allow Facebook to run a risky new cryptocurrency out of a Swiss bank account without oversight,” said Senator Sherrod Brown, the top Democrat on the Senate Banking Committee, in a statement.
U.S. Senator Mark Warner, a Virginia Democrat who also sits on Senate Banking Committee, expressed concern that through Libra, Facebook was using its scale in social networking to achieve dominance in adjacent markets like mobile payments.
French Finance Minister Bruno Le Maire called for more regulation of tech companies.
“This instrument for transactions will allow Facebook to collect millions and millions of data, which strengthens my conviction that there is a need to regulate the digital giants,” he said in an interview on Europe 1 radio.
Facebook has engaged with regulators in the United States and abroad about the planned cryptocurrency, company executives said. They would not specify which regulators.
A U.S. regulatory source briefed on the matter said Facebook had been in communication with U.S. regulators but added it was still unclear how the currency would be structured and whether it would directly fall under any existing U.S. regulatory regimes.
Switzerland’s financial watchdog said it was in contact with the initiators of the Libra project but declined to comment on whether it was obtaining specific regulatory permission or status.
Markus Ferber, a senior German lawmaker in the European parliament, said in a statement that Facebook’s new coin should put “regulators on high alert” and called on the European Commission to start work on regulatory framework for virtual currencies.
Mark Zuckerberg announced today the creation of Calibra, a subsidiary that will oversee Facebook’s interests in Libra, including a digital wallet for the new cryptocurrency.
Rather than exercise direct control over Libra, Facebook will partner with investors such as Visa, PayPal and Uber as members of the Libra Association, an independent entity that will manage the cryptocurrency.
The digital wallet will be available in Messenger, WhatsApp and as a standalone app.
It is expected to launch in 2020, according to a company statement.