A group of Democrats led by Rep. Maxine Waters, the chairwoman of the House Financial Services Committee, sent a letter to Facebook formally asking the company to halt work on its Libra and Calibra projects. The letter, addressed to Facebook’s CEO Mark Zuckerberg, COO Sheryl Sandberg, and Head of Calibra David Marcus, requests that Facebook “immediately cease implementation plans”.
In the letter, the lawmakers expressed multiple concerns with Facebook’s venture into creating a cryptocurrency:
It appears that these products may lend themselves to 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.
Facebook announced the launch of Libra last month alongside its white paper. While the social media company has created a new Switzerland-based non-profit and plans to distribute governance control with 27 other companies, there is still immense skepticism due to Facebook’s past record.
While Facebook has published a “white paper” on these projects, the scant information provided about the intent, roles, potential use, and security of the Libra and Calibra exposes the massive scale of the risks and the lack of clear regulatory protections.
The letter also points out various risks that such a project poses to the financial stability of the U.S. Facebook’s cryptocurrency may be a bigger threat to other weaker currencies due to its reach and ability to create a stable currency.
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. These vulnerabilities could be exploited and obscured by bad actors, as other cryptocurrencies, exchanges, and wallets have been in the past. Indeed, regulators around the globe have already expressed similar concerns, illustrating the need for robust oversight.
Facebook faced a lot of backlash after it privately leaked the data of 50 million users by Cambridge Analytica. The social media giant is being used as a weapon for political agendas which has led presidential candidate Elizabeth Warren to propose the breaking up of Facebook.