U.S. Regulators Demand Scrutiny as Facebook Officially Announces Its New Cryptocurrency
After unveiling their new cryptocurrency project on Tuesday, Facebook is experiencing pushback from both U.S. and European lawmakers. The launch is facing heavy scrutiny and some of the officials calling for it to be put on indefinite hold.
Facebook has recently announced the release of Libra, a blockchain project that will involve a consortium of big companies such as Visa, MasterCard, PayPal, Uber, and Spotify. The currency is meant to enable cheap and easy payments all around the world, and it will be marketed primarily to developing countries.
As soon as the tech giant published its white paper on Libra, politicians were quick to voice their concerns. Maxine Waters, the Democratic congresswoman and House Financial Services Committee Chairwoman gave a press statement that was picked up by multiple news outlets: “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.”
She continued with a demand for Facebook to put project Libra on hold: “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.”
After the statement, a Facebook spokesperson was asked for comment. “We look forward to responding to lawmakers’ questions as this process moves forward,” they stated, implying that the company doesn’t plan to cease the development.
Given Facebook’s history of scandal and the antitrust investigation they are currently being subjected to, both Republican and Democratic officials are reluctant to give the company free reign and allow them even more power to control the market. In Europe, government representatives are similarly opposed to the idea.
“It can’t and it must not happen,” the French Finance Minister, Bruno Le Maire, claimed in an interview for Bloomberg. A German member of the European Parliament also stated that Facebook is at risk of becoming a “shadow bank” and that they “must not be allowed to operate in a regulatory nirvana when introducing virtual currencies.”
U.S. Senator Sherrod Brown is also concerned about Facebook becoming too big and too powerful to control. He stated: “We cannot allow Facebook to run a risky new cryptocurrency out of a Swiss bank account without oversight. I’m calling on our financial watchdogs to scrutinize this closely to ensure users are protected.” The social media company has had numerous issues in the past. Several privacy concerns were raised, the latest one related to a huge data leak that leaked millions of user records on cloud servers. With this new cryptocurrency, there are many concerns that Facebook will exploit users’ data without protecting their privacy.