Just a few weeks ago Facebook confirmed rumors about the Libra Project and released the whitepaper of its upcoming cryptocurrency. Libra will enable a global currency and financial infrastructure that will “empower billions of people around the globe”. The white paper details Facebook’s plans on developing a new decentralized blockchain, with a low volatility cryptocurrency, backed by multiple fiat currencies and financial assets.
Unfortunately, less than 24 hours after the releasing of the whitepaper, many community members, governments, regulators and congressmen were not so happy to hear about Facebook’s cryptocurrency. In Europe, the French Minister, Bruno Le Maire, and the German member of the European Parliament, Marklus Ferber, immediately called for tighter regulations against the social media giant. U.S. lawmakers were also quick to respond with the head of the U.S. House of Representatives Financial Services Committee, Congresswoman Maxine Waters, asking to halt development of the Libra Network until hearings can be held in regards to this matter.
Now the House of Representatives Committee on Financial Services has officially requested Facebook to stop any developments on the Libra project, and especially the stablecoin. The letter addressed to Mark Zuckererg, David Marcus, and Sheryl Sandberg; is requesting that Facebook and its partners agree to a moratorium on the development of the Libra project and its dedicated Calibra wallet. According to the letter, the project could represent:
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 letter also refers to the 27 members of the Libra Association: PayPal, PayU (Naspers’ fintech arm), Stripe, Visa, Booking Holdings, eBay, Facebook/Calibra, Farfetch, Lyft, MercadoPago, Spotify AB, Uber Technologies Inc., Iliad, Vodafone Group, Anchorage, Bison Trails, Coinbase Inc., Xapo Holdings Limited, Andreessen Horowitz, Breakthrough Initiatives, Ribbit Capital, Thrive Capital, Union Square Ventures, Creative Destruction Lab, Kiva, Mercy Corps, and Women’s World Banking.
The letter further states that Facebook failed to provide information about the security of Libra and Calibra, which could expose millions of users to risks and lack of clear regulations. As such, if products like this are left unregulated they could significantly endanger the U.S. and global financial stability. The letter continues describing how investors and consumers transacting in Libra could be exposed to serious privacy and national security concerns, cybersecurity risks, and trading risks, becoming unique targets for hackers and even aiding illicit activities and money laundering. Last but not least, the letter concludes focusing on the major impact Facebook has worldwide, given its massive adoption; which is precisely why regulators are trying to halt its development and hold public hearings on the risks and benefits of the cryptocurrency-based activities and explore legislative solutions.