A coalition of grass-roots, public-interest groups is urging Congress to end Facebook’s newest plan, a digital currency called Libra.
Or at least put it on hold.
In a letter this week, the groups say Facebook’s new cryptocurrency raises “profound questions about national sovereignty, corporate power, consumer protection, competition policy, monetary policy, privacy and more.”
“The U.S. regulatory system is not prepared to address these questions. Nor are the regulatory systems of other nations or international institutions.”
WND reported Facebook’s cryptocurrency is to be governed by a select group of people based in Switzerland.
Breitbart News noted Facebook is establishing a non-profit Libra Association comprised of companies investing in the project, including Visa, Mastercard, PayPal, Uber, Stripe and Booking.com.
Facebook said it chose Switzerland because the country “has a history of global neutrality and openness to blockchain technology, and the association strives to be a neutral, international institution, hence the choice to be registered there.”
Facebook’s white paper on the project said the Libra Association “also serves as the entity through which the Libra Reserve is managed, and hence the stability and growth of the Libra economy are achieved.”
“The association is the only party able to create (mint) and destroy (burn) Libra. Coins are only minted when authorized resellers have purchased those coins from the association with fiat assets to fully back the new coins.”
The cryptocurrency is set to launch in early 2020 in a dozen countries.
The Electronic Privacy Information Center, one member of the coalition, explained that Libra has issues with “sidestepping government oversight and democratic accountability.”
The letter said, “We call on Congress and regulators to impose a moratorium on Facebook’s Libra and related plans until the profound questions raised by the proposal are addressed.”
It continued, “We also urge Facebook to put its implementation of its plans for the new cryptocurrency, Libra, on hold until Congress and regulators have an opportunity to assess and react to a far more detailed presentation than has been made public.”
There are coalition members who think “the proposal is too dangerous to be permitted to proceed.”
Among the questions being raised:
“What transparency standards will apply to the new association that Facebook proposes should govern Libra?”
“How will the Libra Association relate to national governments and intergovernmental organizations? Will it consider the impact of its decisions on particular national interests? Should it? For example, a decision to adjust the basket of reference currencies could have a major effect on the real value of actual currencies.”
“What impact might Libra have on monetary policy in smaller and developing countries.”
“What about the International Monetary Fund?”
“What are the distributional and monetary control consequences?”
“Wouldn’t Libra provide an easy mechanism for money laundering?”
“Wouldn’t Libra similarly facilitate tax evasion and tax fraud?”
“How will national consumer protection laws apply to, be enforced against and prevent misconduct by global sellers and lenders, on matters relating to required disclosures, civil remedies, usury rules, access to credit, unfair and deceptive practices, and more?”
“We have too much recent experience with insufficiently regulated financial markets spinning out of control to let this happen again,” the coalition states. “The Facebook proposal must be put on hold until these numerous and fundamental questions are resolved.”
The signers are American Family Voices, Americans for Financial Reform, Center for Digital Democracy, Center for International Policy, Consumer Action, Consumer Federation of America, Consumer Reports, Courage Campaign, Demand Progress Education Fund, Demos, Digital Intelligence Lab, Economic Policy Institute, Economic Strategy Institute, EPIC, Friends of the Earth-US, Global Witness, Institute for Agriculture and Trade Policy, Institute for Local Self-Reliance, Lake Research, Media Alliance, National Association of Consumer Advocates, National Consumer Law Center, Network for Environmental & Economic Responsibility, Oakland Privacy, Open MIC, Public Citizen, Revolving Door, RootsAction, SEIU, SumOfUs, Open Markets, U.S. PIRG and Woodstock Institute.
Facebook said its 2.4 billion monthly users will be able to change dollars and other international currencies into its new digital coins, which can then be used on the internet.
“Success will mean that a person working abroad has a fast and simple way to send money to family back home, and a college student can pay their rent as easily as they can buy a coffee,” states Facebook in its documentation of Libra.
The members of the Libra Association, which so far is made up of 28 companies that each have invested a minimum of about $10 million, will earn interest on the money that users hold in reserve.
One of the founding members, the British communications conglomerate Vodaphone, envisions a wide range of innovative financial services being developed through Libra’s open-source platform.
“This has the potential to be truly transformative and will benefit those who have never used, or are struggling to access, financial services around the world,” said Stefano Parisse, group director of product and services at Vodafone Group.