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Fed chair raises 'serious concerns' about FB's cryptocurrency project

On Wednesday, the chair of the Federal Reserve, Jerome Powell, said Libra raised a host of "serious concerns" around "money laundering, consumer protection and financial stability"

Nathaniel Popper Mike Isaac & Jeanna Smialek | NYT 

Representations of the Ripple, Bitcoin, Etherum and Litecoin virtual currencies are seen on a PC motherboard in this illustration picture

is facing a growing chorus of doubts about its new Libra cryptocurrency project from authorities around the world, ahead of two congressional hearings on the initiative next week.

On Wednesday, the chair of the Federal Reserve, Jerome Powell, said Libra raised a host of “serious concerns” around “money laundering, consumer protection and financial stability.”

“I just think it cannot go forward without there being broad satisfaction with the way the company has addressed money laundering” and other issues, Mr. Powell said as he testified before the House Financial Services Committee.

Mr. Powell is the latest central banker to express skepticism about Libra, which announced last month. Central bankers from Britain, France, the European Central Bank, Singapore and China have all voiced concerns. Separately, just over a week ago, five top Democrats on the Financial Services Committee wrote a letter to the social network calling on it to “immediately cease implementation plans” for Libra until lawmaker questions were answered.

The scrutiny is set to intensify when the Senate Banking Committee holds a hearing on Libra on Tuesday. The House Financial Services Committee is scheduled to hold a separate hearing about the project a day later.

The top Democrat on the Senate Banking Committee, Sherrod Brown of Ohio, sent a letter on Wednesday to Mr. Powell and others at the Fed, asking the central bank to protect consumers and the economy from “Facebook’s Monopoly Money.”

“We cannot allow giant companies to assert their power over critical public infrastructure,” the letter said.

The blowback to Libra is the latest challenge for Facebook, which has been under fire for not guarding its users’ data privacy and for spreading disinformation and misinformation globally.

Those issues have hurt the Silicon Valley company’s once stellar reputation and raised questions about whether it can properly exercise its power. Since then, Senator Elizabeth Warren, the Massachusetts Democrat who is running for president, has called for and other tech companies to be broken up and the Federal Trade Commission has agreed to handle potential antitrust investigations into the social network.

A Facebook spokeswoman pointed to a letter that David Marcus, who is overseeing the project, sent this week to members of Congress who had criticized Libra. In the letter, Mr. Marcus wrote that “policymakers and others are raising important questions.”

“We want, and need, governments, central banks, regulators, nonprofits and other stakeholders at the table and value all of the feedback we have received,” the letter said.

When Facebook unveiled Libra, company executives said they hoped it would become a new global currency and the foundation for an alternative financial system.

©2019 The New York Times News Service

First Published: Fri, July 12 2019. 01:58 IST