Senate Banking Committee To Hold July Hearing On Facebook’s Libra

Senator Sherrod Brown

Facebook’s Libra cryptocurrency has dominated news cycles ever since it was announced. Now it has caught the attention of senators as well.

The Senate Banking Committee intends to hold a public hearing about Facebook’s cryptocurrency on July 16. The hearing will be titled “Examining Facebook’s Proposed Digital Currency and Data Privacy Considerations”. No witnesses have been announced, as yet.  

According to reports, members of the committee, Chairman Sen. Mike Crapo (R-Idaho) and Sen. Sherrod Brown (D-Ohio) have written to Facebook CEO Mark Zuckerberg for more information on the project and its privacy and consumer protections. The news comes after Rep. Maxine Waters (D-CA) called on Facebook to place a “moratorium” on the project until Congress had finished its evaluation and impact on consumer society.

Unanswered Questions

Facebook’s Libra project envisages the development of a blockchain and a cryptocurrency for use within its social network. The cryptocurrency will be backed by $1 billion in reserves mainly consisting of low-risk assets, such as government securities, cash, and bonds. It will have “low volatility” and be managed by Libra Association, a Switzerland-based nonprofit. The nonprofit boasts payment processors like MasterCard and Visa as members of its council – the governing board which will set direction for the new coin.  

Even though Facebook has released a whitepaper and associated documentation explaining the initiative, there are still several unanswered questions about it. For example, what regulation is applicable to a “low volatility” cryptocurrency? What form and type of coordination with foreign governments should the United States establish in order to regulate a coin whose use is expected to span multiple borders?

Sen. Brown has already cautioned against the social media network’s power. “Facebook is already too big and too powerful, and it has used that power to exploit users’ data without protecting their privacy,” he said. “We cannot allow Facebook to run a risky new cryptocurrency out a Swiss bank account without oversight.”