US Senators are questioning Facebook over its cryptocurrency Libra—whose 2020 launch was announced last month—amid concerns the digital currency will enable money-laundering and threaten national security.
On Monday, US Treasury secretary Steve Mnuchin said Facebook has “a lot of work to do” to persuade officials—including Federal Reserve chief Jerome Powell—that Libra will follow domestic and international monetary laws.
Concern is proving bipartisan: Democrat Senator Maxine Waters asked Facebook to pause Libra’s rollout so lawmakers can properly assess its implications.
Financial regulators and elected representatives want to ensure neither Facebook nor Calibra—a subsidiary purpose-built to offer Libra-based services and products—retain or misuse user data.
On the other hand, cryptocurrencies function by encrypting and decentralising the values, directions, and origins of transactions. House Democrats fear the anonymity this provides will make it easier to fund illicit activities including the drug trade, clientelism, and terrorism.
Republican lawmaker Pat Toomey is less pessimistic, noting Libra is an “exciting innovation” which could provide “security” and “dramatically lower the cost of transactions.”
Central banks worldwide are rallying together to examine how these will be regulated.
Why do tech platforms want to operate outside the regulated financial services sector—and should they be allowed to?