The outlook for Facebook’s new digital currency is becoming increasingly dour as lawmakers from both sides of the aisle amplify demands that the social media giant delay introducing the offering until a long list of concerns is addressed.
The Menlo Park, California-based company has repeatedly promised to wait to launch Libra until regulators sign off on the product.
David Marcus, who heads the company’s digital wallet, Calibra, also routinely stressed during two days of hearings on Capitol Hill this week that the offering will be overseen by a Switzerland-headquartered consortium of companies and exist separate from Facebook’s signature platform.
But those overtures have not been enough to satisfy congressional critics who have pressed the company on issues ranging from the steps Facebook will take to protect consumer privacy to whether the digital currency could impact the strength of the U.S. dollar and other currencies.
And as criticism intensifies, Facebook now runs the real risk of prompting Congress to step in and block the launch of Libra.
“The creation of a new currency is a core government function and should be left to democratically-accountable institutions,” Rep. Carolyn Maloney, D-N.Y., said on Wednesday at a hearing on the digital currency in the House Financial Services Committee. “Congress should seriously consider stopping this project from moving forward.”
Marcus declined to commit to lawmakers that Facebook would initially launch Libra as a pilot program or put a moratorium on work on the offering until legislation is passed to oversee it, a request made by panel Chairwoman Maxine Waters, D-Calif.
While Facebook does have some allies, including Rep. Patrick McHenry of North Carolina, the committee’s top Republican, who urged against a “knee-jerk reaction of banning something before it begins.”
“Those are the politicians that would rather kill it before it grows, but there are others who believe in the vibrancy of American ingenuity,” he said at the hearing
Still, a slew of McHenry's Republican colleagues joined Democrats in calling into question Facebook’s ambitious timeline to introduce Libra.
“A 2020 launch date demonstrates deep insensitivities around how Libra could impact U.S. national security, the global financial system, the privacy of people across the globe, criminal activity and international human rights,” said Rep. Ann Wagner, R-Miss.
Marcus said Facebook is working with Mercy Corps and Women's World Banking on developing human rights safeguards, with more groups expected to join.
Outside Congress, Wall Street is also scrutinizing Facebook’s decision to float the digital currency in a whitepaper released last month.
“What legitimate corporate or consumer global payments need exists that a Facebook-led crypto consortium can uniquely fill? In our view, none,” Morgan Stanley analysts said in a Tuesday note to clients, according to the Wall Street Journal.