Truthout - Watchdogs Urge DOJ to Investigate Legality of Facebook’s Cryptocurrency Venture

Open Markets’ letter to regulators’ documenting grave concerns with Facebook’s digital wallet pilot program receives in-depth coverage.

“Financial industry watchdogs are asking federal officials to attempt to stop the cryptocurrency pilot program launched by Facebook, noting that the U.S. government has the power to criminally prosecute executives for operating the venture.

The Open Markets Institute sent a letter on November 23 to numerous regulatory agencies and the U.S. Department of Justice (DOJ), saying the omnipresent tech conglomerate may be “in the illegal business of receiving deposits without a bank charter.”

“There are several legal and regulatory implications for Facebook’s pilot that warrant particular attention by the agencies,” the Open Markets Institute letter stated.

Other financial industry analysts share the Open Markets Institute’s opinion. Americans for Financial Reform and Demand Progress issued a joint statement in response to the pilot, urging “relevant regulators and lawmakers with jurisdiction over banking, consumer protection, and antitrust to intervene to put this project on hold.”

Facebook has not responded to a request fromTruthout for comments on the claim that it might be illegally taking bank deposits.

Financial institutions in the United States that seek to operate as a bank by lending money and accepting deposits — the latter of which Facebook’s pilot appears to be doing — must first have a bank charter approved by the Office of the Comptroller of the Currency (OCC). The OCC is one of the country’s federal bank regulators and an agency within the Department of Treasury. Bank charters outline how firms will operate as a bank, and include plans to comply with safety and soundness regulations.

The Open Markets Institute letter also noted that regulators recently said so-called stablecoins, the type of cryptocurrency at the heart of the Facebook pilot, should be regulated like banks.”

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