The cryptocurrency of the Facebook Libra has a difficult start. After Libra was announced last month, US legislators were not too enthusiastic about the dubious success story of the social media giants in terms of privacy. Now, the US Financial Services Committee calls on Facebook to stop its plans.
Under the leadership of Representative Maxine Waters, the committee wrote a letter to Facebook CEO Mark Zuckerberg, CEO David Marcus, and COO Sheryl Sandberg for an immediate moratorium on Facebook's plans to introduce the Libra cryptocurrency and the Calibra digital wallet.
"It appears that these products are suitable for a completely new global financial system operating from Switzerland and competing with US monetary policy and the dollar. This raises serious concerns about privacy, trade, national security and monetary policy not only for the over 2 billion users of Facebook, but also for investors, consumers and the entire global economy, "writes the committee in its letter.
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Read more 19659009] The committee also notes that Facebook released a white paper on the cryptocurrency last month, but the "limited information on intent, roles, potential uses and security" was a clear indication of the risks and risks involved, lack of regulatory Protection. He also reiterated the need for strict monitoring of the cryptocurrency, as it would be vulnerable to the same bad players who have targeted other cryptocurrencies, exchanges and digital wallets. The committee also pointed out that, as far as we know, Libra and Calibra do not have custody insurance.
In terms of supervision, Facebook has announced that it will transfer Libra to an independent consortium called the Libra Association. Headquartered in Switzerland, this body "strives to be a neutral, international institution" that facilitates the operation of the cryptocurrency and develops, promotes and expands the Libra network. Twenty-seven companies – including some financial institutions such as MasterCard, Visa and PayPal – have signed up as "nodes", requiring a $ 10 million buy-in. The committee has acknowledged the existence of the Libra Association in its letter, but it is clearly not enough to build trust.
"With Facebook already in the hands of more than a quarter of the world's population, it is imperative that Facebook and its partners immediately adopt the implementation plans until the regulators and Congress have the opportunity to examine these issues and To take action, "writes the committee in its conclusion. "During this moratorium, we intend to hold public hearings on the risks and benefits of cryptocurrency-based activities and review legal solutions. If we do not abandon the implementation before we can do so, there is a risk that a new financial system based in Switzerland will become too big to fail. "
Rep. Waters has announced that it will hold the first hearing of its kind on July 17. How does Facebook seem to handle this? Seems like it's done. "We look forward to working with legislators as this process progresses, including answering their questions at the upcoming House Financial Services and Senate Banking Committee hearings," a Facebook spokesperson told us by email.