Facebook is already taking fire over its crypto plan
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Facebook’s ambitious plan to launch a new cryptocurrency is already facing heavy scrutiny from lawmakers less than a day after being announced, with one senior Democratic politician calling for the project to be put on hold.
On Tuesday, the Silicon Valley social networking giant officially unveiled Libra – its plan for a new digital currency that aims to enable cheap and easy payments around the world, while being jointly managed by a consortium of big corporations (including Mastercard, Uber, PayPal, and Spotify) via the Libra Association.
The cryptocurrency project has published a “white paper” and other documentation detailing its ambitions – and politicians have been quick to raise concerns, pointing to Facebook’s recent history of ugly scandals.
One Australian professional crypto and digital assets investor thinks it’ll be the making of the sector, as Facebook gives its 2.38bn monthly users a taste of crypto, many for the first time.
RBC Capital Markets internet analyst Mark Mahaney also says it’s a potential watershed moment for the company and the global adoption of crypto.
“The mission for Libra is a simple global currency and financial infrastructure that empowers billions of people. In terms of scale and importance, we believe this new financial infrastructure could be viewed similar to Apple’s introduction of iOS to developers over a decade ago,” he wrote in a note.
Democratic congresswoman and House Financial Services Committee chairwoman Maxine Waters has called for the company to pause its plans until regulators can take a look.
“With the announcement that it plans to create a cryptocurrency, Facebook is continuing its unchecked expansion and extending its reach into the lives of its users,” she said in a statement obtained by multiple media outlets, including The Verge.
“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.”
The announcement of Libra comes at a politically sensitive time for Facebook.
The company has been rocked by constant crises, from numerous data privacy issues to intense criticism over social network’s role in spreading hate speech that has fuelled genocide in Myanmar. Facebook – and other big tech companies – are also facing unprecedented scrutiny over their size and power, and growing calls for antitrust action to be taken against them.
By nominally ceding control of the cryptocurrency to the Libra Association, Facebook may hope to isolate itself from further criticism of its expanse and power – but lawmakers are still taking Facebook to task over it.
US Senator Sherrod Brown, ranking member of the US Senate Committee on Banking, Housing, and Urban Affairs, also raised concerns over oversight of the digital currency.
“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. I’m calling on our financial watchdogs to scrutinise this closely to ensure users are protected,” he said in a statement.
There has also been early alarm bells rung by politicians in Europe. France’s finance minister has said Libra must not be allowed to become a “sovereign currency,” while European data protection supervisor Giovanni Buttarelli has warned that “any further concentration of personal data” poses “additional risks to the rights and freedoms of individuals.”
Reached for comment, a Facebook spokesperson implied that the company would not pause development on Libra as Waters has requested. In a statement, they said: “”We look forward to responding to lawmakers’ questions as this process moves forward.”