Senate panel calls hearing on Facebook cryptocurrency project

The Senate Banking Committee on Wednesday scheduled a hearing over Facebook’s plans to create a new cryptocurrency.

The hearing on “Libra” will take place on July 16, with witnesses yet to be announced.

Facebook announced plans to launch the cryptocurrency on Tuesday.

{mosads}The plans for the alternative financial system were laid out in a website and white paper promoting Libra as a way to make transferring money as easy as sending a text message.  

“Libra’s mission is to enable a simple global currency and financial infrastructure that empowers billions of people,” the white paper reads. 

The hearing comes after Sen. Sherrod Brown (D-Ohio), the top Democrat on the banking committee, said in a statement, “We cannot allow Facebook to run a risky new cryptocurrency out of a Swiss bank account without oversight.” 

“I’m calling on our financial watchdogs to scrutinize this closely to ensure users are protected,” he added.

In a letter last month, Brown and Senate Banking Committee Chairman Mike Crapo (R-Idaho) pressed Facebook over its plans to launch a cryptocurrency, posing questions about how the company plans to protect consumers’ financial data. 

“Privacy experts have raised questions about Facebook’s extensive data collection practices and whether any of the data collected by Facebook is being used for purposes that do or should subject Facebook to the Fair Credit Reporting Act,” the senators wrote at the time. 

Brown told The Hill on Tuesday that he is concerned about the project. 

The new digital-native financial system has already drawn scrutiny from lawmakers and regulators who have been criticizing Facebook over its handling of data privacy and potential antitrust issues.

House Financial Services Committee Chairwoman Maxine Waters (D-Calif.) on Tuesday called on Facebook to halt the project until regulators and Congress can weigh in on it.

“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 said in a statement.

Facebook said in the release that the cryptocurrency, supported by more than two dozen major corporations, would be operated by the non-profit Libra Association and separate from the social media platform.

The company is launching a new subsidiary, Calibra, tasked with developing and rolling out Libra. And the cryptocurrency will be operated by a non-profit called the Libra Association, headquartered in Switzerland, which will give Facebook one vote among many companies overseeing the project. The project is backed by powerful tech and finance companies including MasterCard and Uber.

“We look forward to responding to lawmakers’ questions as this process moves forward,” a Facebook spokesperson told The Hill.

Executives are assuring reporters that none of the financial customer data collected by Calibra will be shared with any other Facebook subsidiary.

“Your social data on Facebook is kept separate from Calibra data,” Kevin Weil, Calibra’s vice president of product, said, according to The Washington Post. “This is not about improving ad targeting. We’re trying to draw a bright red line.”

—Emily Birnbaum contributed to this report, which was updated June 19 at 4:31 p.m.