Waters calls on Facebook to halt digital currency plans
House Financial Services Chairwoman Maxine Waters on Tuesday called on Facebook executives to testify before her committee and urged the social media giant to hold off on plans to develop a new digital currency that’s drawing increasing scrutiny from Congress.
In a statement, the California Democrat said Facebook was “continuing its unchecked expansion and extending its reach into the lives of its users” with the announcement of its new “Libra” cryptocurrency. The company, she said, “has repeatedly shown a disregard for the protection and careful use” of its users’ data.
“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,” she said.
The new scrutiny by Waters, who has launched an aggressive oversight effort targeting the finance industry since taking the committee gavel in January, adds to Facebook’s mounting political problems in Washington, where the company is under fire for its privacy practices and its role in facilitating election interference.
Last month, the top Republican and top Democrat on the Senate Banking Committee also asked Facebook founder and CEO Mark Zuckerberg for details on its digital currency project and the consumer data it has sought from banks.
“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 (D-Ohio), the lead Democrat on the Banking Committee. “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.”
Facebook spokesperson Andy Stone said the company looked forward to responding to lawmakers’ questions.
Unveiled Tuesday, the cryptocurrency initiative, code-named “Project Libra,” could become a major e-commerce tool for Facebook users across the social network’s suite of services, from Instagram to messaging. But as with other cryptocurrencies such as Bitcoin, the new coin could also become a tool for money launderers and terrorist financiers, a risk that has drawn the attention of lawmakers and regulators.
The company said it had partnered with a number of financial heavyweights, including Visa and Mastercard and online firms like Spotify and Uber, to form an association to be based in Switzerland that will oversee the development of the new coin.
Waters appeared to have the backing of the top Republican on her committee, Rep. Patrick McHenry (R-N.C.), who also called for a hearing Tuesday.
“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 said in a letter to Waters. “It is incumbent upon us as policymakers to understand Project Libra.”
Waters in her statement Tuesday said the cryptocurrency market lacked a clear regulatory framework to protect investors, consumers and the economy.
“Regulators should see this as a wake-up call to get serious about the privacy and national security concerns, cybersecurity risks, and trading risks that are posed by cryptocurrencies,” she said.