House Financial Services Committee Chair Asks Facebook to Pause Development of Proposed Cryptocurrency
Commentary by Steven Lofchie
In a letter to Facebook executives, Chair of the House Financial Services Committee Maxine Waters (D-CA) and four Democratic representatives requested an immediate moratorium of the proposed blockchain-based cryptocurrency Libra and the digital wallet Calibra. The letter follows previous requests for a moratorium.
According to the letter, the representatives are seeking to hold public hearings on the risks and benefits of these activities and whether additional legislation is necessary to address issues that may be raised. The representatives stated that the proposed development raises "serious privacy, trading, national security, and monetary policy concerns . . . ." The representatives warned that these products raise concerns for Facebook users, as well as the broader global economy, given that these products may create an "entirely new global financial system that is based out of Switzerland . . . to rival U.S. monetary policy and the dollar." Furthermore, the representatives state that the risks these products pose are "even more glaring" considering the Cambridge Analytica scandal, in which a political consulting firm used Facebook users' data to influence voting behavior in the 2016 election.
Commentary
This letter follows shortly after a report by the Bank for International Settlements essentially saying that the big tech players would become major, and very possibly dominant, participants in the national and global financial systems; and that national regulators had to focus on how best to regulate such participation. See BIS Urges Regulators to Address Emergence of Large Technology Firms in Financial Markets.
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