Facebook faces more scrutiny from Congress over Libra cryptocurrency plan

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Published: July 18, 2019 10:03:48 AM

The social media company is fighting to get Washington on its side after it shocked regulators and lawmakers with its announcement on June 18 that it was hoping to launch a new digital coin called Libra in 2020.

Facebook, Libra cryptocurrency plan, data privacy, facebook inc, digital coinFacebook has been on the defense amid a backlash over mishandling user data and not doing enough to prevent Russian interference in the 2016 U.S. presidential election. (Reuters)

Facebook Inc faces more questioning by U.S. lawmakers on Wednesday over its planned cryptocurrency, after a bruising first bout when senators from both parties condemned the project, saying the company had not shown it could be trusted.

The social media company is fighting to get Washington on its side after it shocked regulators and lawmakers with its announcement on June 18 that it was hoping to launch a new digital coin called Libra in 2020. Since then, it has faced criticism from policymakers and financial watchdogs at home and abroad who fear widespread adoption of the digital currency by Facebook’s 2.38 billion users could upend the financial system.

Also read: Facebook’s Libra prospects dim, but cryptocurrencies roll on

“I have serious concerns with Facebook’s plans to create a digital currency and digital wallet,” Maxine Waters, chairwoman of the Democrat-controlled House Financial Services Committee, said in her opening remarks. “If Facebook’s plan comes into fruition, the company and its partners will yield immense economic power that could destabilize currencies.”

Lawmakers are questioning David Marcus, the Facebook executive overseeing the project, who was grilled by the Senate Banking Committee on Tuesday over the possible risks posed by Libra to data privacy, consumer protections and money laundering controls. Senator Sherrod Brown, the top Democrat on the panel, said the currency plan was “delusional.”

The hearing in Congress could prove to be even more tense. The panel has already circulated draft legislation that could kill the project by banning Facebook and other tech firms from entering the financial services space. Facebook has been on the defense amid a backlash over mishandling user data and not doing enough to prevent Russian interference in the 2016 U.S. presidential election.

Marcus, who was president of PayPal from 2012 to 2014, tried to assuage lawmakers on Tuesday by promising not to begin issuing Libra until regulatory concerns had been addressed. He said the company had unveiled the project at an early stage in order to get feedback from all stakeholders.

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