Facebook libra, the social network’s brand new cryptocurrency, should be regulated as if it is a security, the US House of Representatives heard today.
US lawmakers were due to grill Facebook executives over its libra coin today as both Democrats and Republicans prepared to scrutinise chief executive Mark Zuckerberg’s latest project.
A former chairman of the Commodity Futures Trading Commission (CFTC) told the House the scheme appeared to resemble an investment vehicle.
Gary Gensler, who chaired the CFTC for five years until 2014, said in written testimony seen by Coin Desk: “The Libra Reserve, in essence, is a pooled investment vehicle that should at a minimum, be regulated by the Securities and Exchange Commission (SEC), with the Libra Association registering as an investment advisor.”
Senators began the session by pouring scorn on Facebook’s privacy practices after multiple high profile data protection fumbles over the last few years.
“Facebook has demonstrated through scandal after scandal that it doesn’t deserve our trust,” Democratic senator Sherrod Brown, the ranking member of the Senate Banking Committee, said.
“We’d be crazy to give them a chance to let them experiment with people’s bank accounts.”
Facebook’s exec in charge of libra, former Paypal president David Marcus, said: “We know we need to take the time to get this right.”
US Treasury chief Steven Mnuchin warned yesterday that criminals could use Facebook’s libra coin to launder money and even finance terrorism.
Similar accusations have been levelled against bitcoin in the past.
Saying he was “not comfortable” with libra, Mnuchin said cryptocurrencies “have been exploited to support billions of dollars of illicit activity like cyber crime, tax evasion, extortion, ransomware, illicit drugs and human human trafficking”.
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Meanwhile Federal reserve boss Jerome Powell has also said libra raises concerns.
Main image: Facebook executive David Marcus is set for a grilling from democrats and Republicans today (Source: Getty)