Fed Chairman Has Serious Concerns Over Facebook’s Cryptocurrency

U.S. Federal Reserve Chairman Jerome Powell has expressed serious concerns over Facebook’s planned cryptocurrency Libra.

During a testimony in front of the US House of Representatives Financial Services Committee, Powell said, “Libra raises many serious concerns regarding privacy, money laundering, consumer protection and financial stability.”

Powell added that these concerns need to be “addressed very thoroughly and carefully” before the project is allowed to go forward.

The news about Facebook’s planned cryptocurrency had come in early March. In May there were also reports about the social media giant’s plan to launch the cryptocurrency-based payments in many countries by the first quarter of 2020.

Facebook confirmed in June its plans to launch its cryptocurrency Libra in 2020. It also formed a subsidiary called Calibra to run the Libra network, powered by blockchain technology.

Libra Networks was registered in Geneva in May, with Facebook Global Holdings as its stockholder. Libra has been touted as a rival to the world’s most popular cryptocurrency Bitcon.

Meanwhile, five members of the U.S. House of Representatives, all Democrats, had urged in an open letter to Facebook and its partners earlier this month to immediately agree to a moratorium on any movement forward on the Libra cryptocurrency project.

There are serious privacy, trading, national security, and monetary policy concerns for not only Facebook’s more than 2 billion users, but also for investors, consumers, and the broader global economy, according to the Congressmen.

They wanted the Facebook management to put the Libra project on hold until the House Financial Services Committee and affiliated subcommittees hold hearings to determine how it would operate and what protections would be implemented to protect user privacy.

A day later, a group of North American privacy, economic policy and consumer watchdogs called on US Congress and regulators to impose a moratorium on Facebook’s Libra cryptocurrency project.

In a letter with 33 signatories, the group expressed concern that Libra may provide an easy mechanism for money laundering, facilitate tax evasion and tax fraud, and be used as a tool to evade economic sanctions.

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