The Latest: Lawmaker wants Facebook to suspend currency plan
NEW YORK (AP) — The Latest on Facebook’s new digital currency (all times local):
The head of the House Financial Services Committee wants Facebook to suspend plans for a new currency until Congress and regulators are able to study it more closely.
In asking Facebook to put the Libra currency plans on hold, Rep. Maxine Waters, a California Democrat, says Facebook “is continuing its unchecked expansion and extending its reach into the lives of its users.”
Earlier, the senior Democrat on the Senate Banking Committee said Facebook’s new digital currency will give the tech giant unfair competitive advantages in collecting data on financial transactions as well as control over fees. Sen. Sherrod Brown of Ohio says “Facebook is already too big and too powerful.”
Brown and Waters both called on financial regulators to examine the new currency project closely.
In a statement, Facebook said “We look forward to responding to lawmakers’ questions as this process moves forward.”
Rep. Darren Soto, a Florida Democrat who’s on the House Energy and Commerce Committee, says Facebook’s plan is potentially “a big step forward towards a more global and inclusive financial infrastructure.”
Facebook unveiled plans for the Libra cryptocurrency on Tuesday. It’s a digital currency similar to Bitcoin for global use, one that could drive more e-commerce on its services and boost ads on its platforms. Facebook’s Libra currency is expected to roll out in the next six to 12 months.
One regulatory expert believes Facebook’s new currency will “almost surely” fall under new U.S. regulation adopted in the wake of the 2008 financial crisis.
Karen Shaw Petrou, managing partner of Federal Financial Analytics in Washington, says the Facebook-led partnership running the project shouldn’t think it can adopt the social media model of light regulation.
Otherwise, she says, “they are going to get a rude awakening, because people’s money is at risk. This is really serious stuff.”
She says which agency will oversee the venture will depend on what the currency system does.
Earlier Tuesday, French Finance Minister Bruno Le Maire warned on Europe-1 radio that Facebook must offer assurances that its currency won’t hurt consumers or be used for financing illegal activities.
Facebook has surprised cryptocurrency experts in announcing a digital currency that shares fundamental privacy characteristics with Bitcoin, the leading cryptocurrency today.
Human Rights Foundation expert Eric Wall says the Libra currency’s base layer will allow for anonymity even though the bulk of the exchanges where it trades will adhere to anti-money laundering and other regulations.
Wall says it seems to Libra is designed not just for Facebook properties — where data on who is buying what from whom can be scooped up — but also to leak into the unregulated world at large.
The Swedish expert said Tuesday that Facebook appears bent on making Libra the global currency of choice and is very clever in seeking to place the regulatory burden on other businesses. He said, “It’s a pretty sneak move.”
Facebook’s introduction of a new digital currency is likely to draw regulatory scrutiny. But New York University law professor Eleanor Fox says initial details about the currency don’t signal any traditional antitrust problems.
Facebook is already under federal investigation over its privacy practices, and along with other technology giants also faces a new antitrust probe in Congress.
Creating its own globe-spanning currency — one that could conceivably threaten banks, national currencies and the privacy of users — isn’t likely to dampen regulators’ interest in Facebook.
Fox says critics will say this is too much power for Facebook and shouldn’t be allowed. But she considers Facebook’s foray “a grass-roots entry into a new field” and says it can increase innovation.
Facebook said Tuesday it plans to launch the currency over the next six to 12 months.
Shares in Western Union are falling after Facebook announced that it is teaming up with more than two dozen partners to create a new digital currency called Libra.
Facebook has a built-in customer base of two billion users that could help it take a share of the booming digital payment market. It could also take business from more traditional payment companies like Western Union, whose shares fell about 2% in morning trading.
Shares in another money transfer company, MoneyGram, doubled to $2.90 in morning trading after it said it would partner with the cryptocurrency service Ripple to improve its cross-border payment system.
Facebook says Libra is expected to launch in the next six to 12 months.
The head of Facebook’s cryptocurrency operation said in a tweet that feedback from customers has been “loud and clear” about keeping social media and financial data separate.
David Marcus said, “We understand we will have to earn your trust.”
Facebook is currently under federal investigation over its privacy practices.
The company on Tuesday unveiled plans to create a new digital currency similar to Bitcoin for global use, one that could drive more e-commerce on its services and boost ads on its platforms. Facebook’s “Libra” currency is expected to roll out in the next six to 12 months.
Facebook’s plan announced Tuesday to introduce a digital currency comes as the company seeks out new revenue sources, said Wedbush Securities analyst Dan Ives.
Facebook plans to launch the currency, called Libra, in six to 12 months.
“With 2 billion users, Facebook is now looking beyond advertising to find other ways to monetize its massive ecosystem,” he said. But it comes at a tricky time as Facebook is facing increased scrutiny by regulators over data privacy and security concerns.
“It’s a bold and strategic movie that has clear risks as well as opportunities tied to it,” Ives said. “For now, it really comes down to execution, and how comfortable consumers feel around Facebook and cryptocurrency.”
Facebook is unveiling plans to create a new digital currency similar to Bitcoin for global use, one that could drive more e-commerce on its services and boost ads on its platforms.
The digital currency, called Libra, is scheduled to launch sometime in the next six to 12 months. Facebook is taking the lead on building Libra and its underlying technology; its more than two dozen partners — including PayPal, Uber, Spotify, Visa and Mastercard — will help fund, build and govern the system. Facebook hopes to raise as much as $1 billion from existing and future partners to support the effort.
Creating its own globe-spanning currency — one that could conceivably threaten banks, national currencies and the privacy of users — isn’t likely to dampen regulators’ interest in the social media giant. Facebook is currently under federal investigation over its privacy practices, and along with other technology giants also faces a new antitrust probe in Congress.
David Marcus, who is heading Facebook’s cryptocurrency operation, tweeted on Tuesday that Libra is in part aimed at “the 1.7 billion people who are still unbanked 30 years after the invention of the web.”