It took less than a day for Facebook’s new cryptocurrency Libra to face serious opposition from politicians in both the US and the European Union.
Facebook unveiled Libra on Tuesday, showing off a vision of global digital money controlled and issued by an association of corporations (including PayPal, MasterCard, Uber, eBay, a new Facebook subsidiary called Calibra, and more) and aimed at the world’s poor and financially disenfranchised populations, who are unable to open a bank account. The idea of corporations independently starting up a new monetary system has apparently rubbed politicians the wrong way.
On Tuesday, US Rep. Maxine Waters called for a moratorium on Libra’s development until lawmakers can examine the issue. In her statement, Waters referenced Facebook’s “troubled past.” The company has recently been embroiled in numerous privacy scandals that have seen its executives called in front of lawmakers from around the world, invitations that have largely gone unheeded except for CEO Mark Zuckerberg’s now-infamous appearance in front of Congress in 2018.
“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,” Waters said in a statement. In the statement, Waters also invited Facebook executives to testify before Congress.
Waters’ statement joins a chorus of US lawmakers expressing concern over Facebook’s project. Sen. Sherrod Brown said on Tuesday that the US “cannot allow Facebook to run a risky new cryptocurrency,” and Sen. Mark Warner called into question Facebook’s abysmal track record in preserving people’s privacy on its platforms. Republican Rep. Patrick McHenry said that Congress must “assess this project and its potential unprecedented impact on the global financial system,” and Republican Sen. Josh Hawley told Yahoo Finance that Libra represents Facebook “expanding their monopoly.”
"We look forward to responding to lawmakers’ questions as this process moves forward,” a Facebook spokesperson said in an emailed statement.
Using Libra through Calibra will mean identifying oneself, though Facebook claims that Calibra will keep social and financial data separate. Clearly, given Facebook’s history, this claim isn’t holding much water with lawmakers.
In the EU, French Finance Minister Bruno Le Maire had choice words for Libra. “It is out of [the] question’’ that Libra “become a sovereign currency,’’ Le Maire said in a radio interview, Bloomberg reported. “It can’t and it must not happen.” Le Maire called for the central bank governors of G7 nations to prepare a report on Libra for their July meeting.
As the fine details of Libra get ironed out, things are unlikely to get easier in the near-term for Facebook and its corporate partners. Facebook spokespeople told Motherboard on Tuesday that Libra service providers (such as Calibra) will comply with local laws in every jurisdiction they operate in, which is already gearing up to be a mess.