Facebook Inc’s plans to create a new cryptocurrency that could be used for everything from commerce to money transfers is facing pushback from US lawmakers.
US House of Representatives Financial Services Committee Chairwoman Maxine Waters urged the company to halt development of the token until the US Congress and regulators could examine it.
Other lawmakers demanded hearings and questioned whether the coin, called Libra, would have appropriate oversight.
The scrutiny shows the risks for the corporate titan, which already faces deep skepticism in Washington, of moving into a controversial industry such as cryptocurrencies.
Still reeling from allegations that it failed to protect users’ data, the Silicon Valley power is now entering a space that is known for its lax regulation and resistance to oversight.
“Facebook has data on billions of people and has repeatedly shown a disregard for the protection and careful use of this data,” Waters said in a statement. “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.”
US Representative Patrick McHenry, the top Republican on the committee, wants Waters to hold a hearing, saying that Congress needs to go “beyond the rumors and speculations and provide a forum to assess this project and its potential unprecedented impact on the global financial system.”
Particular concerns lawmakers have had about digital currencies include the risk that consumers’ coins might be stolen and the potential for money laundering.
David Marcus, the Facebook executive leading the company’s cryptocurrency and blockchain efforts, last week told Bloomberg that he has been in touch with regulators and central banks in multiple countries.
“We really wanted to make them stakeholders early on in the process and get their feedback early on,” he said.
“We look forward to responding to lawmakers’ questions as this process moves forward,” a Facebook spokeswoman said.
Facebook intends to launch its coin next year.
US Senator Mark Warner said that he was concerned the company appears to be using its corporate heft to move into and try to dominate new industries.
US Senator Sherrod Brown, the top Democrat on the US Senate Committee on Banking, Housing and Urban Affairs, made a point that was common in lawmakers’ statements: Regulators must make sure Facebook users are protected.
However, like others, he did not identify a particular watchdog, perhaps signaling uncertainty over who might police Libra.
The US Securities and Exchange Commission typically steps in when companies raise money by selling ownership stakes in an asset likes shares.
The US Commodity Futures Trading Commission has oversight of trading in futures and derivatives, but not underlying digital tokens.
States and banking regulators such as the US Federal Reserve could potentially have a role in regulating Libra.
Facebook on Tuesday unveiled its much-rumored currency and said it would launch publicly early next year with such partners as Uber Technologies Inc, Visa Inc, Mastercard Inc and PayPal Inc.
Facebook said that a Libra subsidiary that would create crypto wallets that could be used to pay for items would be regulated, the Wall Street Journal reported.
Facebook did not say which agency will have jurisdiction.
French Minister of Finance Bruno Le Maire said that only governments can issue sovereign currencies, adding that Facebook must ensure that Libra would not hurt consumers or be used for illegal activities.
“We will demand guarantees that such transactions cannot be diverted, for example for financing terrorism,” he said on Europe-1 radio.
Le Maire said that he asked heads of the central banks of G7 nations to produce a report by the middle of next month laying out “guarantees that we must set ... to assure us that there are no risks of illicit financing or for the consumer.”
Additional reporting by AP
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