Congress declares war on Libra

A Congressional subcommittee has asked Facebook to “immediately agree to a moratorium on any movement forward on Libra,”  the social network’s upcoming cryptocurrency.

The letter was made public late today and sent to Facebook’s principals, including Mark Zuckerberg, CEO of the social network. It was signed by Rep. Maxine Waters, chairwoman of the Committee on Financial Services a major critic of the project ever since it was unveiled on June 18. 

“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,” Waters’s letter said.  “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.”

She added that if the cryptocurrency were released it risked creating “a new Swiss-based financial system that is too big to fail.” 

Though Facebook provided a white paper and reams of supporting documents when it unveiled its scheme last month, Waters nonetheless argued that thus far, Facebook has given “scant information” about the “intent, roles, potential use, and security of the Libra and Calibra,” which, she said, “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.”

Congressional hearings are planned for mid July during which Facebook’s c-suite is expected to be grilled on its plans.

Waters also slammed Facebook’s track record on privacy, citing last year’s Cambridge Analytica scandal. Facebook “did not always keep its users’ information safe,” she said.   

“Investors and consumers transacting in Libra may be exposed to serious privacy and national security concerns, cyber security risks, and trading risks,” the letter said. “Those using Facebook’s digital wallet—storing potentially trillions of dollars without depository insurance—also may become unique targets for hackers.”

In a statement to Decrypt, a Facebook spokesperson said, “we look forward to working with lawmakers as this process moves forward, including answering their questions at the upcoming House Financial Services and Senate Banking Committee hearings.”

Updated with comment from Facebook.