A group of five Democrat lawmakers is calling on Facebook to halt the development of Libra, its cryptocurrency project.
In an open letter to Facebook's Chief Executive Mark Zuckerberg, Chief Operating Officer Sherly Sandberg and David Marcus, Chief Executive of the social media giant's digital wallet unit Calibra, the lawmakers said Facebook's efforts are raising "serious" privacy, trading, national security, and monetary policy concerns.
RELATED: FACEBOOK JUST ANNOUNCED ITS NEW DIGITAL WALLET AND CURRENCY: CALIBRA
"We write to request that Facebook and its partners immediately agree to a moratorium on any movement
forward on Libra- its proposed cryptocurrency and Calibra-its proposed digital wallet," the lawmakers led by Maxine Walters, chair of the House Financial Services Committee 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."
Facebook Wants to Make it Easier to Make Purchases
In June Facebook announced plans to develop a new digital currency and financial system that would enable consumers to send money and purchase things simply by sending a photo or message.
While the cryptocurrency dubbed Libra will be operated by a nonprofit group Facebook will make money off the digital wallet its Calibra unit is building. The wallet will be used to store and exchange Libra.
When announcing the efforts, Facebook said its keeping Calibra separate from its social media unit. The digital currency is slated to launch in the first half of next year. The Libra Association is based in Geneva, Switzerland and is backed by several companies including Mastercard, PayPal, Visa, Uber, and Spotify. Its mission is to ensure the digital token is widely available, is stable and secure.
Left Unchecked Libra Could Be a Disaster
According to the lawmakers, Facebook didn't provide too many details about the potential use and security of Libra and the Calibra wallet in its white paper. If products and services like this are left improperly regulated and without the proper oversight, it could pose risks to U.S. and global financial stability, the politicians argue.
They warned vulnerabilities could be exploited by hackers as has been the case with other cryptocurrencies, exchanges, and wallets. In the first three-quarters of 2018 hackers took close to $1 billion from cryptocurrency exchanges, noted the Democrats in the letter.
"Because Facebook is already in the hands of over a quarter of the world's population, it is imperative that
Facebook and its partners immediately cease implementation plans until regulators and Congress have an
opportunity to examine these issues and take action," wrote the Democrats. "During this moratorium, we intend to hold public hearings on the risks and benefits of cryptocurrency-based activities and explore legislative solutions. Failure to cease implementation before we can do so, risks a new Swiss-based financial system that is too big to fail."