House Democrats ask Facebook to halt its Cryptocurrency project – Libra
A group of Democrats led by Rep. Maxine Waters, the chairwoman of the House Financial Services Committee has sent out a letter to Facebook asking the company to halt operations on its Cryptocurrency project Libra and its digital wallet Calibra. The letter which is addressed to Facebook’s CEO Mark Zuckerberg, COO Sheryl Sandberg and Head of Calibra David Marcus asks the company to “immediately cease implementation plans”.
In the letter, the lawmakers expressed several concerns over Facebook’s venture into creating a Cryptocurrency, the lawmakers wrote:
“It appears that these products may lend themselves to an entirely new global financial system that is based out of Switzerland and intended to rival U.S. monetary policy and the dollar. This raises serious privacy, trading, national security, and monetary policy concerns for not only Facebook’s over 2 billion users, but also for investors, consumers, and the broader global economy.”
Facebook announced the launch of Libra last month by releasing its whitepaper, while the social media giant has created a new non-profit based out of Switzerland and plans to distribute governance control with 27 other companies including Mastercard, Paypal, Coinbase, Uber, etc there is still immense skepticism due to Facebook’s past record.
“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.”
The letter also highlights various risks associated with such a project to the financial stability of the United States. Facebook’s Cryptocurrency might be a bigger threat to other weaker currencies due to its reach and ability to create a more stable currency.
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.
Facebook had faced a lot of backlash after the private data leak of 50 Million users by Cambridge Analytica. Facebook is being used as a weapon for political agendas which has even led presidential candidate Elizabeth Warren to propose the break up of Facebook, it is quite natural that the company would face a lot of regulatory hurdles when it is trying to enter the world of Finance by creating a new currency.
Regulators can’t write a letter to Bitcoin
There were some articles that compared Facebook’s coin to Bitcoin when they couldn’t be more different. Bitcoin is a free market limited supply asset that is not backed by any company or organization. The creator of Bitcoin Satoshi Nakamoto was well aware of the risks involved in creating a new currency which is why he decided to remain anonymous and eventually leave the project.
Members of Congress just sent this letter to Facebook asking them to officially stop development of Libra.
Wait till Congress finds out they can’t send letters to Bitcoin🔥 pic.twitter.com/rCG1jh4RhL
— Pomp 🌪 (@APompliano) July 3, 2019
If regulators wanted to stop Bitcoin, there are no companies to which they can send letters. Even if the government gets control of Bitcoin core code repository there are other implementations that the nodes can implement. Bitcoin is ultimately governed by its userbase and its value is decided by the market instead of a centralized organization, unlike any fiat currency.
However, keep in mind that Bitcoin is yet to be proven. It will truly be a global currency when it is able to resist attacks from the world governments for non-financial reasons.