U.S. and Global Regulators Are Unprepared to Address Potential Abuses and Risks of Libra
WASHINGTON, D.C. – Congress and regulators should impose a moratorium on Facebook’s proposal to create a new, global currency as part of its Libra project, a broad coalition said today in a letter to legislators and regulators.
Facebook’s proposal “raises profound questions about national sovereignty, corporate power, consumer protection, competition policy, monetary policy, privacy and more,” the groups said. “The U.S. regulatory system is not prepared to address these questions. Nor are the regulatory systems of other nations or international institutions. All of us believe the risks posed by Facebook’s proposal are too great to allow the plan to proceed with so many unanswered questions.”
Thirty-three consumer, privacy, economic policy and other organizations signed the letter, which highlights more than two dozen questions. Among them are:
- 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?
- Given Facebook’s record and stated views on privacy, why should anyone believe that the company’s claims and commitments about privacy will be upheld?
- Will Facebook be able to use Libra and Calibra (a subsidiary involved in its cryptocurrency program) to pull consumers into a closed Facebook ecosystem that will disadvantage competitors and consumers?
- Wouldn’t Libra provide an easy mechanism for money laundering?
- Wouldn’t Libra similarly facilitate tax evasion and tax fraud?
- What impact might Libra have on monetary policy in smaller and developing countries?
The letter concludes: “We have too much recent experience with insufficiently regulated financial markets spinning out of control to let this happen again. The Facebook proposal must be put on hold until these numerous and fundamental questions are resolved.”