The US House Financial Services Committee asked Facebook and its partners to stop developing Libra stablecoin.
In a letter to Facebook CEO Mark Zuckerberg and David Marcus and chief operating officer Cheryl Sandberg on July 2, lawmakers demanded that Facebook and its partners immediately agree to suspend development Libra and its dedicated Calibra wallet.
The committee claims that the project may lead to “establishing a new global financial system based on Switzerland that is designed to rival US monetary policy and the dollar.” The committee noted that it believes such efforts may be serious influences:
“This not only raises more than 2 billion users for Facebook, but also raises serious privacy, transactions, national security and monetary policy issues for investors, consumers and the wider global economy.”
The letter said it foresees cybersecurity vulnerabilities, which could result in the loss of trillions of dollars in uninsured deposits, and consumers may face serious privacy and national security issues.
The committee also pointed out that Facebook’s past use of user data has further exacerbated these concerns. The letter stated:
“If products and services like this are improperly regulated and not adequately supervised, they can pose systemic risks that jeopardize US and global financial stability.”
The committee stated that “Facebook and its partners must immediately stop implementing the plan before the regulator explores the above issues”. During the proposed moratorium, the regulator intends to hold a public hearing on the risks and benefits of the system and explore legislative solutions. The letter concludes:
“If we can’t stop execution before we do so, we will face a new Swiss financial system that is too big to fail.”
As Cointelegraph reported yesterday, more than 30 advocacy groups have become signatories at the request of Congress and regulators to officially suspend Libra development.
Also yesterday, Nobel Prize-winning economist Joseph Eugene Stiglitz published an article stating that “each currency is based on trust, but only a fool can trust Facebook’s Libra.”