DealBook Briefing: Lawmakers Line Up to Scrutinize Facebook’s Cryptocurrency

Facebook’s cryptocurrency already faces blowback
The dust hadn’t even settled on Facebook’s announcement about its new cryptocurrency, named Libra, before lawmakers around the world made it clear that they were skeptical.
“Facebook is already too big and too powerful, and it has used that power to exploit users’ data without protecting their privacy,” Representative Maxine Waters, who chairs the House Financial Services Committee, said in a statement. “We cannot allow Facebook to run a risky new cryptocurrency out of a Swiss bank account without oversight.” She asked Facebook for a moratorium on the project until Congress and regulators weigh in.
There were plenty of other critics. Senator Sherrod Brown, the top Democrat on the Senate Banking Committee; Senator Mark Warner, a Democrat on the same committee; and Representative Patrick McHenry, the senior Republican on Ms. Waters’s panel, all expressed concern about Libra.
And it will be studied closely from the get-go. The FT reports that a panel formed by the Group of 7 nations, along with central banks and the International Monetary Fund, will investigate so-called stablecoins like Libra, which are cryptocurrencies whose value is tied to government-issued money. While the G7 statement didn’t specifically mention Facebook’s token — instead saying it would study the broad effects of stablecoins on issues like financial stability and money-laundering — the timing was striking.
Facebook knows the importance of the politics here. “The success of this venture depends on its trusted and safe integration with the existing financial system,” it wrote in documents describing Libra. “The world’s governments, specifically regulatory and law-enforcement authorities, are essential partners in this endeavor.”
More: Here are some of the big things we still don’t know about Libra.
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Today’s DealBook Briefing was written by Andrew Ross Sorkin in New York, and Michael J. de la Merced and Jamie Condliffe in London.