US Federal Reserve Wary of Facebook’s Libra
The US Federal Reserve System has presented its doubts when it comes to Facebook’s new crypto project, Libra.
Federal Reserve Chairman Jerome Powell said the US central bank has “serious concerns” about Libra, during his speech to House lawmakers which was made this Wednesday.
Facebook released last month its Libra cryptocurrency, which will be overseen by a governing body called the Libra Association and managed by its Calibra wallet.
Facebook has managed so far to secure 27 launch partners for Libra, such as PayPal, Visa, Uber, Coinbase, Lyft, Mastercard, Vodafone, eBay, and Spotify, but it intends to expand its Libra Association up to 100 members in by 2020.
Libra will be launched in the first half of next year and was developed to serve as a payment method for making purchases, transferring money and donations.
“While the project’s sponsors hold out the possibility of public benefits, including improved financial access for consumers, Libra raises many serious concerns regarding privacy, money laundering, consumer protection, and financial stability,” said Powell when he was asked about Libra by Rep. Maxine Waters.
It was reported that the Federal Reserve System and a separate panel called the Financial Stability Oversight Council were gathering to talk about Libra.
David Marcus, head of Calibra, stated last week that the Libra Association is “committed to a collaborative process with regulators, central banks and lawmakers to ensure that Libra helps with the kinds of issues that the existing financial system has been fighting.”
Marcus also tweeted:
“Just caught up with comments from @federalreserve Chairman Powell at his @FSCDems Hearing, and I fully agree that legitimate concerns about @Libra_ should be addressed carefully and patiently and that it shouldn’t be rushed. This is why we shared plans early.”
Libra has not been met with warmth by US and European politicians as many immediately pointed out Facebook’s bad rep for data security problems. In some countries, Facebook has avoided launching Libra due to regulatory uncertainty.
The chair of the US House Financial Services Committee, Waters, has said in the past that Facebook “has repeatedly shown a disregard for the protection and careful use of this data.” Last week she submitted a letter to Facebook executives in which it asked them to temporarily halt plans to develop Libra until all security and privacy aspects are sorted out.
A hearing organized by the Senate committee will take place on July 17 in which Facebook’s cryptocurrency will be discussed.
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