On July 2nd, The United States House of Representatives Committee on Financial Services sent a letter requesting Facebook and its partners to halt development of its ‘Libra’ project.
In the letter addressed to CEO Mark Zuckerberg, David Marcus, and COO Sheryl Sandberg, the representatives requested that the social media giant immediately agree to a moratorium on the development of Libra and its dedicated Calibra digital wallet.
The strongly worded letter has asked for a temporary prohibition of further activity on the project and has insinuated that the Libra currency could lead to ‘an entirely new global financial system that is based out of Switzerland and intended to rival U.S. monetary policy and the dollar.’
The letter also implies that the project, through its reach of 2 billion customers could pose a risk to national security, privacy, trading and monetary policy within the U.S. and globally. The potential within the new cryptocurrency is also deemed a threat to the U.S. economy and the US Dollar.
Members from the House of Representatives have contextualized their input by emphasizing current vulnerabilities inherent in the crypto industry. Cybersecurity and exchange hacks were highlighted, as seen previously. Due to the scale of Facebook’s proposal it has been noted that trillions of dollars could potentially be at risk, which in-turn could cause risks to the global monetary system.
The committee were also quick to highlight Facebook’s past discrepancies, especially the privacy leak of over 50 million customers during the Cambridge Analytica scandal. Representatives note that ‘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.’
The concern demonstrated, arises from Facebook’s user reach.
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 House of Representatives now intend to hold public hearings to explore legislative solutions after weighing up the risks and benefits to the cryptocurrency project. The letter concluded with a profound statement.
Failure to cease implementation before we can do so, risks a new Swiss-based financial system that is too big to fail.