Facebook's Libra cryptocurrency faces pushback from US lawmakers

Lawmakers still have a lot of questions about Facebook's cryptocurrency plans.

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Queenie Wong
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House Financial Services Committee Holds Hearing On Keeping Megabanks Accountable

Chairwoman of the House Financial Services Committee Rep. Maxine Waters.

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Facebook's plans to launch a new cryptocurrency in 2020 is already raising the eyebrows of US lawmakers. Rep. Maxine Waters, who chairs the House Financial Services Committee, on Tuesday called on Facebook to pause its development of a new digital coin called Libra, citing the company's seemingly endless list of scandals. 

The company is working with 27 partners to launch Libra, which is expected to be released along with a new digital wallet that works with Messenger and WhatsApp. People will be able to use Libra to purchase products, send money across borders or make donations. 

"With the announcement that it plans to create a cryptocurrency, Facebook is continuing its unchecked expansion and extending its reach into the lives of its users," Waters said in a statement. 

"The cryptocurrency market currently lacks a clear regulatory framework to provide strong protections for investors, consumers and the economy. 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," she added.

The lawmaker's remarks highlight some of the regulatory hurdles the social media giant could face as it moves forward with its plans to launch Libra. It's also been called before a Senate panel on July 16.

Waters, a California Democrat, said Facebook "has repeatedly shown a disregard for the protection and careful use of this data." The social media company could face a record-setting fine of up to $5 billion from the Federal Trade Commission, which has been investigating Facebook for allegedly failing to protect user privacy. Last year, revelations surfaced that UK political consultancy Cambridge Analytica harvested the data of up to 87 million users without their permission. 

She wants Facebook to halt its Libra project until Congress and regulators examine some of the issues she outlined in the statement. 

Rep. Patrick McHenry, a top Republican on the House Financial Services Committee, also requested a hearing on Facebook and its cryptocurrency project. Waters said in her statement that Facebook executives should testify before the committee. 

This isn't the first time lawmakers have expressed concerns about Facebook's cryptocurrency plans, which could keep users on the platform longer and generate revenue outside of advertising. In May, lawmakers with the Senate Committee on Banking, Housing and Urban Affairs asked Facebook to answer questions about its cryptocurrency project, including what privacy and security protections will be available to consumers. As of Wednesday afternoon, the committee still hadn't received responses from the social network. 

The July 16 Senate committee hearing, titled "Examining Facebook's Proposed Digital Currency and Data Privacy Considerations," is scheduled for 7 a.m. PT. Witnesses haven't yet been announce, but Reuters reported that David Marcus, who's in charge of Facebook's blockchain work, is expected to testify.

Waters announced on June 24 that the House Financial Services Committee will hold a hearing on July 17 titled "Examining Facebook's Proposed Cryptocurrency and Its Impact on Consumers, Investors, and the American Financial System."

It could face similar scrutiny in Britain, according to Reuters. Bank of England Deputy Governor Sam Woods noted that regulators would have to consider how they'd treat this new asset class.

"It does seem clear that something like this could be very important from a regulatory point of view," he told a Brussels financial conference.

Facebook didn't respond to a request for comment.

CNET's Sean Keane contributed to this report.

Originally published June 18, 4:03 p.m. PT.

Updated June 24, 5:34 p.m. PT: With information about House committee hearing.
Updated June 20, 6:58 a.m. PT: Adds Bank of England deputy governor's comments.