U.S. asks Facebook to shut its crypto currency and digital wallet project

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Facebook Crypto Project

Regulatory agencies worldwide have been appealing to Facebook to comply with regulations.

In a letter dated July 2, members of the U.S. House of Representatives Committee on Financial Services, Rep. Maxime Waters and Rep. Carolyn Maloney, have sent a letter requesting an agreement to a moratorium of activities related to Libra and Calibra, to Facebook CEO and founder, Mark Zuckerberg, COO of social media network, Sheryl Sandberg and the CEO of Calibra, David Markus.

The letter requests Facebook and its partners to put to a halt the development of the Libra cryptocurrency and the digital wallet Calibra, that is targeted to launch next year, on the grounds that these products may effectively give rise to a new Global financial system capable of challenging U.S. monetary policy and the U.S. dollar.

The letter also states that the white paper provided by Libra does not fulfil the prerequisites for its development, as it is not enough to address the risks, potential uses and security of the digital assets under way.

Proper regulation and sufficient supervision are obligatory in case of such services.:

“Because Facebook is already in the hands of over a quarter of the world’s population, it is imperative that Facebook and its partners immediately cease implementation plans until regulators and Congress have an opportunity to examine these risks and take action.”

If products and services like these are left improperly regulated and without sufficient oversight, they could pose systemic risks putting U.S. and global financial stability into danger. These vulnerabilities could be exploited by other cryptocurrencies, exchanges, and wallets have been in the past. – Rep. Maxime Waters (D-CA), the chairwoman of the House Financial Services Committee

Citing the incident of the theft of almost $1 billion by hackers from crypto exchanges, the Representatives also warned about illicit activity and money laundering on an unregulated platform.

Also citing concerns about economical risks, customer privacy and national security, the letter stated that:

“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.”

Apart from the U.S., regulatory agencies including France, Italy, Singapore, the United Kingdom, among others, have also expressed disquiet about Facebook’s operational procedure regarding its cryptocurrency Libra and e-wallet Calibra. 

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