US House Democrats to Facebook: Stop the Libra Mobile Payments Scheme

July 5, 2019         By: Steven Anderson

The launch of the Libra cryptocurrency and its ancillary efforts like the Calibra wallet have drawn plenty of attention to Facebook and to cryptocurrency itself for the last few weeks now. Yet there is already growing discontent from one corner, as Democrats in the US House of Representatives—specifically those in the House Financial Services Committee—have already expressed official disapproval of the plan, and are calling on Facebook to shutter the operation itself.

Reports suggest that the House Financial Services Committee, via a letter sent to Facebook officials, believes that Facebook’s Libra represents risks to financial stability, security, and the United States’ control over monetary policy.

Further, the letter reportedly notes that “these products may lend themselves to an entirely new global financial system that is based out of Switzerland and intended to rival US monetary policy and the dollar.” The letter in question was signed by not only the committee’s chair, Maxine Waters, but also by Lacy Clay, Al Green, Stephen Lynch and Carolyn Maloney.

Lest some believe this is left-wing alarmist bloviation, there’s actually bipartisan support for Facebook’s crypto shutdown. The Senate Banking Chair, Mike Crapo, has scheduled a hearing on Libra for July 16th, noting that there were potential risks involved for data privacy. Waters’ committee will hold its own hearing one day later. Such sentiments have been echoed throughout the House, which certainly suggests that Facebook’s plans may not get off the ground at all.

Facebook reaches a whole lot of people worldwide. Reports from the House committee itself suggest Facebook reaches about one in four people worldwide. So the idea that Libra could ultimately be a new kind of global currency really isn’t out of line either. However, one point that will likely come up during these hearings is that Libra was meant as a stablecoin, pegged to a basket of investments used for a reserve at last report. Thus its ability to “compete” with the US dollar might be limited at best since the dollar likely has some say in Libra’s overall pricing.

Still, this may not be argument enough to keep the regulators at bay. That’s a point that may ultimately come back to haunt Facebook in the end, and may scuttle Libra before it can even really begin.