House Financial Services Committee Chairwoman Maxine Waters (D-Calif.) on Tuesday called on Facebook to halt its new cryptocurrency project until regulators and Congress weigh in on the endeavor.
In a statement, Waters said that the social media giant should back away from the financial services industry because of the company’s repeated privacy breaches, alleged violation of consumer protection laws, and a string of other controversies involving user data.
“With the announcement that it plans to create a cryptocurrency, Facebook is continuing its unchecked expansion and extending its reach into the lives of its users,” Waters said in a Tuesday statement.
{mosads}“Given the company’s troubled past, I am requesting that Facebook agree to a moratorium on any movement forward on developing a cryptocurrency until Congress and regulators have the opportunity to examine these issues and take action.”
Waters also said Facebook executives should appear before the Financial Services committee to answer questions about the cryptocurrency project.
Facebook on Tuesday unveiled its plans to launch Project Libra, a payments system based on a cryptocurrency supported by more than two dozen major corporations, including Uber, Mastercard, Spotify, Vodafone, Coinbase and Women’s World Banking.
Facebook said that the cryptocurrency project would be operated by the non-profit Libra Association and separate from the social media platform.
Facebook’s immense size, reach, market power and pervasive privacy breaches raised concerns across the political spectrum about Libra’s potential impact on financial markets.
Rep. Patrick McHenry (R-N.C.), ranking Republican on the Financial Services panel, asked Waters in a Tuesday letter to hold a hearing on Project Libra and “its potential unprecedented impact on the global financial system.”
“While there is great promise for this new technology in fostering financial inclusion and faster payments, particularly in the developing world, we know there are many open questions as to the scope and scale of the project and how it will conform to our global financial regulatory framework,” McHenry wrote.
“It is incumbent upon us as policymakers to understand Project Libra,” he continued, arguing that the panel should “go beyond the rumors and speculations and provide a forum to assess this project.”
While Facebook allows users of its Messenger application to send and receive money, Libra’s potential independence from traditional banks could pose unique legal and oversight challenges for financial regulators. The project would likely boost federal scrutiny of Facebook, which is under sanctions by the Federal Trade Commission for several alleged violations of consumer privacy.
“Facebook is already too big and too powerful, and it has used that power to exploit users’ data without protecting their privacy,” said Sen. Sherrod Brown, ranking Democrat on the Senate Banking Committee, in a Tuesday statement.
“We cannot allow Facebook to run a risky new cryptocurrency out of a Swiss bank account without oversight,” Brown said. “I’m calling on our financial watchdogs to scrutinize this closely to ensure users are protected.”