The head of the U.S. central bank believes Facebook should not be allowed to launch its Libra cryptocurrency until the company details how it will handle a number of regulatory concerns.
“I just think it cannot go forward without there being broad satisfaction with the way the company has addressed money laundering,” Jerome Powell, chairman of the Federal Reserve, said in a hearing before the House Financial Services Committee on Wednesday.
“Data protection, consumer privacy, all of those things will need to be addressed very thoroughly and carefully in a deliberate process that will not be a sprint to implementation.”
According to Reuters, Powell added that Libra raised “many serious concerns” around financial stability and consumer protection as well. The Federal Reserve has apparently created a working group to track the development of the cryptocurrency, and is working with central banks in other nations as well.
The U.S. Financial Stability Oversight Council, a federal organization created in 2010 that operates under the auspices of the U.S. Treasury Department, will also look into the project.
Powell explained that some of the concerns around Libra stem from Facebook’s size, noting that it “has a couple billion-plus users.”
‘I want real answers’
Facebook has been under fire since publishing its white paper for Libra, with lawmakers, regulators and finance ministers worldwide calling on the company to suspend development until questions about the project are answered.
David Marcus, Facebook’s blockchain lead and the head of Calibra, a subsidiary which will build a digital wallet for the cryptocurrency, responded to some questions by the Senate Banking Committee on Tuesday.
Senator Sherrod Brown (D.-OH), ranking member of the committee, was unimpressed by Marcus’s responses, saying in a statement:
“Facebook failed to provide answers about Libra. I want real answers during next week’s hearing and I’m calling on our financial watchdogs to scrutinize Libra closely to ensure users are protected.”
Marcus will testify in front of the Senate Banking Committee on July 16 and the House Financial Services Committee on July 17.
Fed Chair Jerome Powell image via House Financial Services Committee / YouTube