Jerome Powell, the Federal Reserve Chair has commented that Facebook should give adequate explanation with regard to the concerns that exist around the performance of its upcoming stablecoin Libra within the regulatory framework.
Powell made these comments during a hearing being held before the House Financial Services Committee on 10th July.
Representative Steve Stivers asked the following question to Powell during the course of the meeting:
“If Facebook can’t sufficiently answer your questions about anti-money laundering, Know Your Customer, what would your message be to the banks that provide banking to Facebook, and what would your advice to Facebook be?”
To this question, Powell replied:
“ … I just think it cannot go forward without there being broad satisfaction with the way the company has addressed money laundering, all of those things. The number of concerns that I list at the beginning, data protection, consumer privacy, all of those things will need to be addressed very thoroughly and carefully.”
Powell also explained how the Libra project falls outside the bounds of the traditional regulatory ecosystem, considering the scale of the upcoming and eagerly anticipated cryptocurrency project. He said:
“I think it’s something that doesn’t fit nearly or easily within our regulatory scheme. It does have potentially systemic scale.”
Maxine Waters, the Chairperson, also asked a question to Powell about whether or not the Fed should be alert with respect to how the monetary policy applies to Libra. Powell gave a similar response, as he said:
“Libra raises many serious concerns regarding privacy, money laundering, consumer protection, and financial stability. These are concerns that should be thoroughly and publicly addressed before proceeding.”
Powell had spoken about the Fed’s inclination towards and role in regulating the proposed cryptocurrency back in June. He had indicated that while the Feds would not necessarily wield any direct authority, they would definitely have some degree of influence. He said:
“… we don’t have plenary authority over cryptocurrencies as such. They play into our world through consumer protection and money laundering and things like that. But, I would say that … through international forums … we have significant input into the payment system and, as you know, play an important role in the payment system here in the United States.”
Clearly, the concerns of the regulatory authorities about Libra crypto seem to be quite unceasing, even as David Marcus and other representatives continue to passionately defend it.