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US House of Reps Requests Moratorium on Libra Project

A few days ago we had reported how the United States House of Representatives Committee on Financial Services was planning to hold a hearing on Facebook’s much anticipated and hyped up crypto project Libra. Finally, it has reached a decision on the issue, and has called upon Facebook and other organizations working to promote the cryptocurrency to stop developing the coin altogether.

In a letter addressed to Facebook CEOs Mark Zuckerberg and David Marcus, and COO Sheryl Sandberg, dated 2nd of July, 2019, the legislators have requested that Facebook and the other companies that are a part of the Libra Association immediately decide on a moratorium to stop the development of Libra crypto as well as the Calibra wallet associated with it.

The committee has argued that the project is likely to create “an entirely new global financial system that is based out of Switzerland and intended to rival U.S. monetary policy and the dollar.” This will naturally have adverse effects on the development of sovereign economies and could have some other grave implications. In the letter, it writes:

”This raises serious privacy, trading, national security, and monetary policy concerns for not only Facebook’s over 2 billion users, but also for investors, consumers, and the broader global economy.”

The letter also warns against possible cyber security issues in the foreseeable future. This could lead to losses worth trillions of dollars, of deposits that have not been insured. Moreover, this could also expose consumers to grave privacy concerns. National security could also be potentially threatened as a result.

The committee also brought up Facebook’s questionable track record of handling user privacy and then mentioned the possibility of further risks. The letter went on to say that:

“If products and services like these are left improperly regulated and without sufficient oversight, they could pose systemic risks that endanger U.S. and global financial stability.”

Proposing the moratorium, the letter said “it is imperative that Facebook and its partners immediately cease implementation plans”, at least till the regulatory authorities can adequately address all the issues mentioned in the letter.

The regulators are planning to hold public hearings to discuss possible pros and cons of the system and to mull over legislative solutions. In its concluding remarks, the letter says:

“Failure to cease implementation before we can do so, risks a new Swiss-based financial system that is too big to fail.”

With this, the debate around Libra crypto continues, especially as regulators around the world remain skeptical about the project. Will Facebook give in to the House of Representatives’ request? It seems unlikely but only time will tell.