House Democrats call for Facebook to halt cryptocurrency project

House Democrats call for Facebook to halt cryptocurrency project
© The Hill Illustration

A group of Democrats on the House Financial Services Committee is calling on Facebook to halt its plan to develop a cryptocurrency-based payments platform.

The lawmakers, whose panel will hold a hearing later this month on Facebook’s Project Libra, wrote a letter to company executives Tuesday expressing concerns with the cryptocurrency’s security and oversight while stressing the need to protect users' privacy and thwart hackers.

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“If products and services like these are left improperly regulated and without sufficient oversight, they could pose systemic risks that endanger U.S. and global financial stability. These vulnerabilities could be exploited and obscured by bad actors, as other cryptocurrencies, exchanges, and wallets have been in the past,” the lawmakers wrote.

“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,” they continued. 

The letter urges Facebook and its partners to "immediately agree to a moratorium on any movement forward on Libra." The letter was addressed to Facebook CEO Mark ZuckerbergMark Elliot ZuckerbergFemale lawmakers pressure Facebook to crack down on disinformation targeting women leaders Hillicon Valley: Facebook removes Trump post | TikTok gets competitor | Lawmakers raise grid safety concerns 20 state AGs call on Facebook to take greater steps to combat hate speech, online harassment MORE, COO Sheryl Sandberg and Project Libra chief David Marcus.

House Financial Services Committee Chairwoman Maxine WatersMaxine Moore WatersBill from Warren, Gillibrand and Waters would make Fed fight economic racial inequalities Waters rips Trump, GOP over mail-in ballots: 'They'll lie, cheat and steal to stay in power' CDC director says he wasn't involved in decision to reroute COVID-19 hospitalization data MORE (D-Calif.) and Democratic Reps. Carolyn MaloneyCarolyn Bosher MaloneyUS could avoid 4.5M early deaths by fighting climate change, study finds Carolyn Maloney defeats Suraj Patel to win New York primary: AP Maloney, Torres declare victory in NY primary races after weeks of delays MORE (N.Y.), Wm. Lacy ClayWilliam (Lacy) Lacy ClayHuffPost reporter discusses progressives' successful showing on Tuesday The Hill's Campaign Report: COVID-19 puts conventions in flux  Progressives soaring after big primary night MORE (Mo.), Al GreenAlexander (Al) N. GreenThe Memo: Trump's race tactics fall flat Trump administration ending support for 7 Texas testing sites as coronavirus cases spike The Hill's Coronavirus Report: Miami mayor worries about suicide and domestic violence rise; Trump-governor debate intensifies MORE (Texas) and Stephen LynchStephen Francis LynchHouse committee requests hearing with postmaster general amid mail-in voting concerns House Democrats launch investigation into Trump administration's repeal of silencer export ban Hillicon Valley: UK bans Huawei from 5G networks | Shipt workers to strike over pay structure | Democrat presses Google, Apple over foreign transparency MORE (Mass.) all signed the letter.

The Democrats said their concerns were only heightened by Facebook’s past privacy scandals, highlighting the harvesting of data from more than 50 million users from the political consulting firm Cambridge Analytica during the 2016 presidential election.

“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 issues and take action,” they wrote.

The Senate Banking Committee will also hold a hearing on Project Libra later this month.

Facebook’s Calibra subsidiary first unveiled its plans for the cryptocurrency last month that would be operated by the Swiss nonprofit Libra Association and separate from the social media platform. Facebook will be one of dozens of companies with investing and voting power in the project, along with Uber, Mastercard, Spotify, Vodafone, Coinbase and Women's World Banking. 

Executives were quick to assure users that their privacy would be protected.

“Your social data on Facebook is kept separate from Calibra data,” Kevin Weil, Calibra’s vice president of product, told The Washington Post. “This is not about improving ad targeting. We’re trying to draw a bright red line.”

Libra's blockchain technology will allow users to hold addresses that are separate from their real-world identity. The cryptocurrency will also be backed by government currencies such as the dollar to help ensure its stability. 

Libra, should it ultimately be implemented, will be available in Facebook's messaging services, Messenger and WhatsApp, as well as in a separate app.