What just happened? Facebook might be getting ready to introduce its Libra cryptocurrency to the world, but Democrats on the US House Financial Services Committee have asked for the plans to be put on hold so Congress can examine concerns.
While we had known for a while that it was in development, Facebook officially unveiled Libra last month. The social network expects to launch the crypto and its digital wallet next year, with the plan being to eventually hand control over to an independent consortium of over 100 companies, including Visa, Mastercard, PayPal, and Uber Technologies.
But in a letter sent to Facebook, the Democratic heads of the House Financial Services Committee asked the company to "immediately cease implementation plans" for Libra so regulators can explore concerns including hacking, data security, and global financial security.
“Because Facebook is already in the hands of over a quarter of the world’s population, it is imperative that Facebook and its partners immediately cease implementation plans until regulators and Congress have an opportunity to examine these issues and take action,” the letter reads.
“During this moratorium, we intend to hold public hearings on the risks and benefits of cryptocurrency-based activities and explore legislative solutions. Failure to cease implementation before we can do so risks a new Swiss-based financial system that is too big to fail.”
Facebook said it wants the Calibra wallet app to help people who can’t access the most basic of financial services, including bank accounts. But with Facebook not exactly having the best reputation when it comes to respecting privacy, and the fact it already has so much global influence, there are concerns over Libra.
While Facebook insists that Libra "will be regulated like other payment service providers," lawmakers are skeptical.
“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,” states the letter. “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.”
This isn’t the only obstacle Libra faces. On July 16, the Republican-led Senate Banking Committee will hold a hearing to question witnesses over the cryptocurrency.
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