Facebook’s nascent crypto project Libra which was announced recently in June has run into hot waters several times even before its official launch next year. However, this time around the gravity of the situation is quite concerning as US federal reserve chairman has called for halting on any further progress until Facebook addresses serious regulatory concerns.
Jerome Powell, the chairman raised serious concerns while speaking to the US House of Representatives Financial Services Committee and echoed the feelings of many lawmakers and regulators around the globe.
Facebook disclosed at the time of announcing libra to the world that it will be backed by a basket of fiat currencies and government securities. As soon as the news about libra’s financial working model broke out, regulators around the globe warned of its dire consequences. They said that libra’s working structure is piggy-riding on existing the financial system which costs millions in compliances.
With multiple fiats of different countries backing it, Libra token won’t fall under due restrictions of any regulators, it might run havoc on the existing financial structure. Powell said, “Libra raises many serious concerns regarding privacy, money laundering, consumer protection, and financial stability,” Powell went onto mention that if the project is not carefully reviewed and given approval by the policymakers, “I don’t think the project can go forward.”
US lawmakers call for Libra project to be put on hold
Project Libra is being overseen by Libra Association, a consortium of 28 tech and finance firms. The US lawmakers have called for halting the project unless it has been reviewed by a committee of policymakers and regulators.
The lawmakers belive Facebook with its mass digital footprint of over 2 billion users across Whatsapp, Instagram and Facebook can cause serious trouble to the existing banking sector. Powell reinforced during his speech that regulators around the globe are already struggling to device the right set of framework for digital assets. He explained,
“It’s something that doesn’t fit neatly or easily within our regulatory scheme but it does have a potentially systemic scale,”
Apart from US lawmakers, the Central bank of Japan, Bank of England, and The Bank for International Settlements have shared their concerns over the project. As of now, it is unclear how US Feds are going to halt Facebook’s future development, given their obscure treatment towards digital assets. However, Facebook executives are scheduled to appear before Congress to discuss the developments of project Libra.