Facebook's plans for its upcoming Libra cryptocurrency are already facing regulatory scrutiny as central banks and politicians around the world have called for oversight on the social network’s crypto project. The Block has compiled their reactions:
France’s finance minister Bruno Le Maire said that Libra “can’t and...must not happen” and that “it is out of question’’ for the cryptocurrency to “become a sovereign currency.” He has reportedly called on the Group of Seven (G7) central bank governors and guardians of the global monetary system to review the social media giant’s upcoming cryptocurrency and submit a report next month.
Markus Ferber, a German member of the European Parliament, warned that Facebook could become a “shadow bank” and said regulators should be vigilant.
U.S. Rep. Patrick McHenry, senior Republican on the House Financial Services Committee, first asked for a hearing on Project Libra in a letter to committee Chairwoman, U.S. Rep. Maxine Waters. Later, Waters, a Democrat, called for a halt to Facebook's development of its cryptocurrency.
"Regulators should see this as a wake-up call to get serious about the privacy and national security concerns, cybersecurity risks, and trading risks that are posed by cryptocurrencies," Waters said, adding, "Given the company's troubled past, I am requesting that Facebook agree to a moratorium on any movement forward on developing a cryptocurrency until Congress and regulators have the opportunity to examine these issues and take action."
Ohio U.S. Senator Sherrod Brown, the top Democrat on the Senate Banking Committee, reportedly said: “Facebook is already too big and too powerful, and it has used that power to exploit users’ data without protecting their privacy. We cannot allow Facebook to run a risky new cryptocurrency out of a Swiss bank account without oversight."
U.S. Federal Reserve chairman Jerome Powell said that the central bank has spoken to Facebook about Libra. "Facebook has made rounds with regulators around the world to discuss its plans [Libra], including us. There are benefits...but also risks we're watching, and echo the statement [Bank of England] Governor Carney issued."
Bank of England governor Mark Carney said he is open-minded about Libra, but warned mass adoption would force it "to be subject to the highest standards of regulation.” He also said that Libra would not launch with an “open door” from regulators.
Australia’s central bank chief Philip Lowe reportedly said: “There’s a lot of water under the bridge before Facebook’s proposal becomes something we’re using all the time.” He added: “There are a lot of regulatory issues that need to be addressed and they’ve got to make sure there’s a solid business case, so we’ve got to be careful before we jump to conclusions.”
Swiss Financial Market Supervisory Authority is also reportedly in contact with the "initiators" of Facebook's crypto project, and is to determine "whether the planned services require approval under Swiss supervisory law and, if so, which."
Facebook officially unveiled its cryptocurrency plans earlier this week, with an aim to serve the unbanked and facilitate low-fee money transfers globally. The cryptocurrency Libra is expected to go live next year.
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