The Fed Chair Says Facebook's Libra Raises 'Serious Concerns'

WIRED | 7/10/2019 | Gregory Barber
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Within hours of its splashy Libra announcement last month, Facebook’s cryptocurrency plans had become a political cudgel. Drawing on Facebook’s privacy missteps and a gathering storm over antitrust, lawmakers swiftly demanded the company halt work on Libra while it addressed how it would avoid past mistakes. Those calls didn’t pose an immediate threat. Now, though, the project is getting attention from those who could potentially cool or delay Facebook’s ambitions: global regulators.

Gregory Barber covers cryptocurrency, blockchain, and artificial intelligence for WIRED.

Wednesday - Federal - Reserve - Chair - Jerome

On Wednesday, Federal Reserve Chair Jerome Powell told the House Financial Services Committee that Facebook’s push into finance posed “many serious concerns.” In addition to worries about privacy, money laundering, and consumer protections, Libra poses serious risks to global financial stability due to the enormity of Facebook’s user base, Powell said. “The process of addressing these concerns should be a patient and careful one, not a sprint,” he said, adding that the Fed is collaborating with other federal agencies and central banks abroad.

Powell’s concerns come on the heels of similar comments from top regulators in Europe and Asia. On Sunday, Benoît Cœuré, an executive at the European Central Bank, described Libra as a “wake-up call” to regulators, saying it could not operate in a “void” outside the typical structure of central banks. One issue for regulators is that Facebook’s project lacks any obvious precedent. The company’s plans involve a Switzerland-based association that would manage Libra’s blockchain-based platform, as well as the funds used to back the value of its tokens. Companies, including Facebook, could set up wallets and other apps, allowing Libra to operate a global financial network outside of the usual framework of central banks like the Fed.

Powell - Comments - Wednesday - Response - Questions

Powell’s comments on Wednesday came in response to questions from Representative Maxine Waters (D-California), who has been among Libra’s fiercest critics. Her...
(Excerpt) Read more at: WIRED
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