Last month, Facebook announced that it is developing a new cryptocurrency called Libra. Additionally, the social media service is working on a digital wallet called Calibra. Once operational, it will allow users to make purchases online and off. When the company revealed its intention to enter the financial sector, politicians around the world criticized the move.
Now, the U.S. House Committee on Financial Services has asked Facebook to suspend development of its latest venture.
House Committee wants more Time
On July 2, Financial Services Committee Chairwoman, Maxine Waters (D-Ca.), sent a letter to Facebook CEO Mark Zuckerberg, COO Sheryl Sandberg, and Libra CEO David Marcus. In it, she asked the corporation to halt work on its cryptocurrency projects until Congress and other government agencies can study its impact on the global financial system.
“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,” wrote the congresswoman. Democratic representatives from Massachusetts, Missouri, New York, and Texas also signed the message.
The committee argues the firm hasn’t provided enough information regarding the usage and security of its digital coin and wallet. The group also expressed concern that Facebook might establish an unregulated financial system that could threaten international trading and national security. The congressional body is also concerned that Libra and Calibra might imperil the privacy of the service’s 2.4 billion users.
Lastly, the letter concludes by noting the House Financial Services Committee plans to hold public hearings on Facebook’s banking initiatives.
The House Committee on Financial Services isn’t the only governmental body to express concerns about Libra and Calibra. The U.S. Senate Banking Committee wants to examine the privacy implications of the Silicon Valley giant’s financial sector expansion. Moreover, Chairman Mike Crapo (R-Id.) has scheduled a public hearing on the matter on July 16.
In response to the congressional request, Facebook told The Verge it looks forward to meeting with lawmakers to answer any questions they have about the project. Furthermore, David Marcus authored a blog post reiterating that Facebook won’t administer Libra. The firm issued a white paper explaining that the Libra Association, a consortium of 28 large corporations that are backing the digital coin, would oversee its operation.
Financial Crimes Risks
Several European politicians have also publicly objected to the launch of Facebook’s digital coin. Last month, French Finance Minister Bruno Le Maire expressed concern that the cryptocurrency would be used for “finance terrorism.” Moreover, he said he’d ask the G7 Central Bank Governors to create a report outlining Libra’s potential risks.
Indeed, a 2015 report compiled by online intelligence company S2T found that terrorist organization ISIS used Bitcoin to facilitate its operations.
It’s also worth noting that Facebook’s digital coin and wallet could increase the recent wave of municipal ransomware attacks. In the last few months, hackers have used malware to encrypt the digital infrastructure of cities and towns across America. While rogue operators have used everything from National Security Agency tools to North Korean cyber weapons to conduct their attacks, they’ve asked for ransom using the same method. In each case, bad actors have requested payment via Bitcoin.
Because it can cost millions to restore a municipal network, many civic leaders have met ransom demands to save money. If Facebook launches Libra and Calibra, it’s possible that civil ransomware attacks could become more frequent. Indeed, it would be nearly impossible to track a sizeable illicit transaction through the biggest decentralized financial network in history.
In his blog post addressing Libra’s critics, David Marcus mentioned his company would institute “regulated on and off ramps.”
However, he didn’t detail the firm’s anti-crime monitoring apparatus or its collaboration with international law enforcement agencies.