The backlash against Facebook’s project Libra has started even before it’s projected launch in 2020. On July 2nd, the US ‘House of Representatives’ Committee on Financial Services have issued a moratorium to Mark Zuckerberg, Sheryl Sandberg, and the chief executive of Calibra, David Marcus, on the development of both Libra Coin and its wallet, Calibra.
In this letter, the representatives from Congress voice their concerns about the Libra project given Facebook’s history with Privacy and data breaches.
“While Facebook has published a “white paper” on these projects, the scant information provided about the intent, roles, potential use, and security of the Libra and Calibra exposes the massive scale of the risks and the lack of clear regulatory protections. If products and services like these are left improperly regulated and without sufficient oversight, they could pose systemic risks that endanger U.S. and global financial stability. These vulnerabilities could be exploited and obscured by bad actors, as other cryptocurrencies, exchanges, and wallets have been in the past. Indeed, regulators around the globe have already expressed similar concerns, illustrating the need for robust oversight.”
Among others, their main concern seems to be about how it could put the US dollar and financial stability as a whole at risk. Especially since its based in Switzerland, they see it as a potential for unscrupulous activities like money laundering etc, as they haven’t properly defined what measures they’re going to take in order to prevent such activities.
The letter went on further to say,
Circling back to Facebook’s security concerns, the letter also highlights the risks of using cryptocurrency exchanges in general as a means of making transactions. Facebook was in early talks with Binance to list Libra on their exchange, given that Binance got hacked earlier this year and the hackers stole $40 million worth of Bitcoins. This poses a huge risk for its massive user base which consists of almost a quarter of the world’s population.
This also raises the question of whether Congress is seriously concerned about the mass adoption and use of cryptocurrencies once listed on crypto exchanges. Since Libra coin would have trading pairs with other cryptocurrencies, this would make buying and selling crypto assets much easier because they plan on implementing it on their biggest platforms i.e Facebook Messenger and WhatsApp.
Lastly, the letter specified that Congress wants an opportunity to examine these issues accordingly by having public hearings on the risks and benefits of cryptocurrency-based activities and explore legislative solutions. As healthy as this interaction sounds, it raises a cause of concern since there is no way to discuss Libra coin without discussing about the legality of cryptocurrencies in general.
Even though Facebook’s Libra project is garnering an immense amount of attention towards crypto and digital assets. The fact that they’re still a centralized entity is the reason why they are answerable to laws that govern them, unlike the complete decentralized nature of Bitcoin where congress cannot summon anyone to come and testify in public hearings.