U.S. Congress Requests that Facebook Freeze Development of Libra

The United States House of Representatives Committee on Financial Services has formally called on Facebook to cease development of its cryptocurrency, Libra, in an open letter sent to executives in the company.

This Tuesday, U.S. lawmakers wrote an open letter addressed to Facebook’s CEO Mark Zuckerberg, COO Sheryl Sandberg, and David Marcus requesting them to immediately agree to a moratorium on the development of Libra, and its dedicated wallet, Calibra. They have requested a halt on the development until the Financial Services Committee, and other subcommittees, have had the opportunity to hold hearings on how the new stablecoin will operate, and what protections could be implemented in order to protect its user’s privacy.

The person who led the committee, and also signed the letter, was Maxine Waters, the Chairwoman of the House Financial Services Committee, who has repeatedly requested Facebook to pause development of Libra. The letter itself focuses on the concerns that lawmakers have with Facebook’s past track record, as well as, the potential of Libra to act as a new global currency. The letter reads:

“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.”

The letter also claims that the Committee has foreseen some cybersecurity vulnerability, which could eventually lead to trillion dollars worth of losses, and expose its users to privacy issues and national security concerns. The letter also states:

“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. 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.”

Facebook first unveiled Libra in June this year, and announced that the body that will govern the new stablecoin will be the Libra Association, which at the time of the announcement already had 27 members. The company is hoping to have at least 100 members before the new token goes live.

Even though the letter says that during the proposed moratorium regulators will hold public hearings on the matter, Facebook already has 2 scheduled for July. The first hearing will be with the Senate Banking Committee, and is set for July 16, and the second is with the House Financial Services Committee, scheduled for July 17.