Facebook’s long-awaited cryptocurrency was made official yesterday, with the social media giant publishing Libra’s whitepaper, ending months of speculation. According to the whitepaper, Libra would be launched in the first half of 2020. This could end up as a pipe dream, if regulators have their way.
Per reports from the BBC, the U.S. House of Representatives’ Financial Services Committee wants the social media giant to put its crypto plan on hold. Rep. Maxine Waters (D-CA), the Committee’s Chairperson, argues that the social media giant should wait for the legislators to examine the asset before making further announcements.
According to the report, Congresswoman Waters said,
“Given the company’s troubled past, I am requesting that Facebook agree to a moratorium on any movement forward on developing a crypto-currency until Congress and regulators have the opportunity to examine these issues and take action.”
Waters’ fears are warranted. Facebook has had a torrid history over its privacy and information handling performances, so much so that Facebook’s CEO Mark Zuckerberg and the company’s COO Sheryl Sandberg, had to appear before Congress last year for questioning.
Mixing Facebook’s past with the perceived notion that cryptocurrencies are dangerous together would send shivers down the spine of any government. It’s not surprising as to why Congress wants the social media giant to take things slow.
Lawmakers need more information
Chairwoman Waters’ sentiment was also shared by Rep. Patrick McHenry (R-NC), a member of Waters’ Committee, as was communicated in a letter to the former this morning.
In his letter, McHenry wrote:
“It is incumbent upon us as policymakers to understand Project Libra. We need 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.”
It’s worth noting that Senators Mike Carpo (R-ID) and Sherrod Brown (D-OH) of the U.S. Senate Committee on Banking, Housing, and Urban Affairs, had sent Mark Zuckerberg an open letter in May, requesting specific details on Libra, including whether Facebook had liaised with lawmakers while in the asset’s development process.
Whether Facebook responded to this letter, remains unknown, but it would seem that even if they did, lawmakers would like to know more.
Libra will be scrutinized
Outside of the U.S., regulators from France to Germany have registered their displeasure at the project. For some, the data that could be harvested is scary. While others are worried about the growing influence of the social media giant.
In more ways than one, Facebook would be doing itself a service if it co-operates with regulators early on. Appearing before Congress would provide more clarity about Libra, and if the point does come when Congress isn’t satisfied with what they’re seeing, recommendations could be made, arguments could ensue, and compromises could be reached.
Resolutions would be made eventually, and Facebook could go back to implement these recommendations before the 2020 launch of Libra. Even if these recommendations do end up delaying Libra’s launch, it seems like a small price to pay for regulatory compliance.
In addition to that, the recommendation of lawmakers could serve as a blueprint for other tech giants who plan to make inroads into crypto space.