A group of Democrats on the House Financial Services Committee wrote a letter asking Facebook to stop its Libra cryptocurrency plans (via MarketWatch).
Libra Cryptocurrency
The letter [PDF] is to Facebook CEO Mark Zuckerberg, CFO Sheryl Sandberg and CEO of Facebook’s Calibra digital wallet David Marcus. It was signed by committee chair Maxine Waters, D-Calif., along and Reps. Carolyn Maloney, D-N.Y., Lacy Clay, D-Mo., Al Green, D-Texas, and Stephen Lynch, D-Mass.
The committee is worried that “these products may lend themselves to an entirely new global financial system that is based out of Switzerland and intended to rival U.S. monetary policy and the dollar.” They call on Facebook to stop Libra until Congress and regulators have time to have public hearings on its risks and benefits and explore legislative solutions.
Investors and consumers transacting in Libra may be exposed to serious privacy and national security concerns, cyber security risks, and trading risks. Those using Facebook’s digital wallet—storing potentially trillions of dollars without depository insurance—also may become unique targets for hackers. For example, during the first three quarters of 2018, hackers stole nearly $1 billion from cryptocurrency exchanges. The system could also provide an under-regulated platform for illicit activity and money laundering.
Further Reading:
[Libra, Facebook’s Cryptocurrency, Coming 2020]
[Libra: Finally, a Way for Facebook to Control More, with Andrew Orr – ACM 516]
This does bring up one aspect I hadn’t thought about. Up till now international trade in things like oil have been done in a trusted national currency, the US Dollar at the moment. There are those pushing to drop the Dollar, most often it is suggested they use a basket approach, a marker tied to the value of several national currencies. But what if a cryptocurrency is used. It is secure. It is designed to be sent over the Internet. An agreed upon value could be chosen and then all transactions carried out in it. Most importantly, and this letter shows it is a concern, it is untraceable. Just another block of data flying around, just this one is a billion dollars and is going to Iran for a bunch of oil sent via pipeline through the Caucasus. That one is fifty million for a shipment of diamonds into New York. That other one is five hundred to somebodies kid in college to pay rent. All untraceable, all nontaxable, all unaccountable.