Vanity Fair: Congress Calls on an Immediate Moratorium on Zuckerberg’s New Cryptocurrency

House lawmakers are officially requesting that Facebook put an end to its cryptocurrency efforts—at least for now. In a letter sent to Facebook CEO Mark Zuckerberg, COO Sheryl Sandberg, and Calibra CEO David Marcus, the House Financial Services Committee asked Facebook and its partners to “immediately agree to a moratorium on any movement forward on Libra—its proposed cryptocurrency and Calibra—its proposed digital wallet.” Citing the cryptocurrency’s “inten[tion] to rival U.S. monetary policy and the dollar,” lawmakers said the proposed monetary system “raises serious privacy, trading, national security, and monetary policy concerns for not only Facebook’s over two billion users, but also for investors, consumers, and the broader global economy.”

Facebook first announced Libra in June as a new cryptocurrency effort that Zuckerberg hoped would “make it easy for everyone to send and receive money just like you use our apps to instantly share messages and photos.” Though Facebook is behind the cryptocurrency’s technical creation, the company has proposed it would be one of 100 partners to have a say in the cryptocurrency, which would be overseen by a neutral “Libra Association” in Switzerland. Facebook’s seeming willingness to cede full control over Libra, as well as its insistence that the platform will be secure, seems designed to deflect criticism based on the company’s past privacy failings—but Congress isn’t buying their promises. Lawmakers wrote that the “systemic risks” posed by the cryptocurrency platform—especially without sufficient oversight and regulations—“are even more glaring in light of Facebook’s troubled past, where it did not always keep its users’ information safe.” The House Committee pointed to the Cambridge Analytica scandal to bolster its point, along with the proliferation of fake Facebook accounts displaying “terrorist propaganda and hate speech” and lawsuits that have been brought against the company for violating fair housing laws.

“Because Facebook is already in the hands of a over 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 letter, which was signed by Financial Services chair Rep. Maxine Waters and subcommittee chairs Reps. Carolyn MaloneyWm. Lacy ClayAl Green, and Stephen F. Lynch, reads. “During this moratorium, we intend to hold public hearings on the risks and benefits of cryptocurrency-based activities and explore legislative solutions. Failure to cease implementation before we can do so, risks a new Swiss-based financial system that is too big to fail.”

The official House letter came after Waters verbally called for a moratorium soon after Libra’s announcement, saying Facebook was “continuing its unchecked expansion and extending its reach into the lives of its users.” Though only Democratic lawmakers signed on to Tuesday’s letter, the committee’s Facebook criticism appears to have bipartisan support; Rep. Patrick McHenry, the committee’s ranking Republican, previously urged Waters to call for hearings into the cryptocurrency. The Senate’s Committee on Banking, Housing, and Urban Affairs, which is Republican-led, has also asked Facebook to provide more clarity on their cryptocurrency plans. The Senate banking committee will hold a hearing on Libra July 16, while the House committee will hold its first hearing into Libra and its “impact on consumers, investors, and the American financial system” July 17.

Read the full article on Vanity Fair. 

See the rest of Barry C. Lynn's work

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