Open Markets Documents Grave Concerns with Facebook’s Digital Wallet Pilot Program

The Justice Department, Federal Trade Commission, and Financial Regulators should examine and mitigate the risks the pilot presents

WASHINGTON— Today, the Open Markets Institute sent a letter to antitrust and financial regulators and the Department of Justice raising serious concerns about Facebook’s digital asset pilot. The letter warns of the Facebook digital asset pilot’s potential for predatory pricing, monetization of consumers’ private financial data, conflicts of interest, and unchecked concentrations of corporate power.

It flags that Facebook is initially subsidizing the very high fees in the underlying technology it’s utilizing, opening the potential for predatory pricing. The letter also highlights questions about potential conflicts of interest within the pilot and questions whether Facebook has contemplated policies to ensure there aren’t ethical breaches. For example, Coinbase is a partner in the project, but also has its own investment in the company (Paxos) issuing the stablecoin used in the project (the Pax Dollar).

In response, Alexis Goldstein, Financial Policy Director at Open Markets Institute, issued the following statement:

“While Facebook is trumpeting the potential of its digital asset pilot to help with remittances to Guatemala, the reality is that high fees in the technology they’re utilizing and needed connections to existing banks makes their stated goals of enhancing financial inclusion virtually impossible. Instead, Facebook’s pilot is likely another attempt by the firm to further grow its dominance in digital advertising, and monetize its users' private data.”

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Download the full letter here or see below.