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U.S. politicians hammer Facebook over Libra digital currency project

Image: Blavity Inc.'s Summit21 Conference
Maxine Waters speaks on stage during the Blavity Inc.'s Summit21 Influencer Conference for black women on June 8, 2019, in Atlanta. -
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U.S politicians have wasted no time in criticizing Facebook's entry into the world of digital currencies.

Politicians from both parties pilloried the social network's plans for a cryptocurrency called Libra, which it announced Tuesday along with 27 other companies and organizations as partners.

Rep. Maxine Waters, D-Calif., chair of the House Financial Services Committee, called on Facebook to stop the development of Libra, citing the company's recent issues with privacy and misinformation. She also pointed to the lack of regulation around cryptocurrencies as an ongoing issue.

"Regulators should see this as a wake-up call to get serious about the privacy and national security concerns, cybersecurity risks and trading risks that are posed by cryptocurrencies," Waters said in an emailed statement. "Given the company's troubled past, I am requesting that Facebook agree to a moratorium on any movement forward on developing a cryptocurrency until Congress and regulators have the opportunity to examine these issues and take action."

A Facebook spokesperson said the company looks forward to responding to lawmakers' questions.

The responses provided a litmus test for the broad political vitriol that now greets almost any news about Facebook. The company is the subject of ongoing investigations around its handling of user data, as well as growing calls for the company to be broken up. Facebook also owns and operates the popular apps Messenger, Instagram and WhatsApp..

Waters' statement came after Rep. Patrick McHenry, R-N.C., ranking member of the House Financial Services Committee, called for a hearing.

"It is incumbent upon us as policymakers to understand project Libra," McHenry said. "We need to go beyond the rumors and speculations and provide a forum to assess this project and its potential unprecedented impact on the global financial system."

Facebook said its participation in Libra would initially consist of a new subsidiary called Calibra, which will operate a digital wallet for the currency. The company said it would keep data about financial transactions separate from its social network data.

That promise did little to quell concerns from lawmakers about the company's privacy track record.

"Facebook already controls massive amounts of personal data and has failed to protect users' privacy," Rep. Katie Porter, D-Calif., said in a statement. "An expansion into consumer finance raises a lot of important questions about the company's monopoly power, potential threats to fair competition, and new risks to our financial system. The FTC should take a hard look at this."

Sen. Josh Hawley, R-Mo., who has emerged as one of the strongest conservative critics of big tech companies, said he didn't trust Facebook to handle his money.

"Sounds like they're expanding their monopoly," Hawley told Yahoo Finance reporter Jessica Smith.

Sen. Sherrod Brown, D-Ohio, offered a similarly scathing assessment.

"Facebook is already too big and too powerful, and it has used that power to exploit users' data without protecting their privacy," Brown tweeted. "We cannot allow Facebook to run a risky new cryptocurrency out of a Swiss bank account without oversight."

Rep. Darren Soto, D-Fla., offered one of the least critical reactions of any politician.

"Facebook's #Libra has potential to be a big step forward towards a more global and inclusive financial infrastructure, ultimately benefiting our society & economy," Soto tweeted. "Congress must protect consumers and privacy, while promoting innovation for blockchain!"