US lawmakers seek 'immediate' halt to Facebook's digital coin

Facebook is setting up a Swiss-based non-profit foundation to manage the currency. Photo / Getty Images

US lawmakers have called on Facebook to halt its plans to launch a digital currency "immediately", until regulators and Congress have examined the risks the project poses to consumers and wider financial stability.

Maxine Waters, the Democratic chair of the House financial services committee, and three other House Democrats on Tuesday urged top Facebook executives in an open letter to "immediately agree to a moratorium on any movement forward" on Libra, the proposed cryptocurrency.

The lawmakers cited "privacy, trading, national security, and monetary policy concerns", and referenced Facebook's "troubled" reputation around user privacy in the wake of the Cambridge Analytica data scandal.

"It appears 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 said.

"If products and services like these are left improperly regulated and without sufficient oversight, they could pose systemic risks that endanger US and global financial stability," it added. "Failure to cease implementation before we can do so, risks a new Swiss-based financial system that is too big to fail."

Facebook last month announced its plans to shake up the global payments market by creating a cryptocurrency designed to be sent across borders almost instantaneously and at very low cost.

The company is setting up a Swiss non-profit foundation to manage the currency and is working with other technology groups, including Uber, Spotify, Visa and Mastercard, each of which has pledged to invest at least US$10 million in the project.

But the move has drawn warnings from regulators. The G7, the international Financial Stability Board and the UK's Financial Conduct Authority are among those that have said they plan to scrutinise the project.

While the Democratic lawmakers have no power to force a moratorium on Facebook's plans, their hostile stance suggests the social media group will face bruising committee hearings over the coming weeks.

Both the House financial services committee and the Senate banking committee have scheduled hearings to discuss Libra in mid-July.

Some note that were a Democratic president to win the 2020 election, they may try to call on regulators to stop the project. Last month, Elizabeth Warren, a Democratic senator and presidential candidate, addressed the topic of Libra on Twitter, writing: "We need to hold them accountable — not give them the chance to access even more user data."

A Facebook spokesperson said in response to the letter: "We look forward to working with lawmakers as this process moves forward, including answering their questions at the upcoming House Financial Services and Senate Banking Committee hearings."

- Additional reporting by Kiran Stacey.

Written by: Hannah Murphy

© Financial Times