The US central bank head thinks Facebook should not be permitted to issue its Libra coin until it elaborates how it will handle several regulatory concerns.
“I just think it cannot go forward without there being broad satisfaction with the way the company has addressed money laundering,” Federal Reserve chairperson Jerome Powell stated in a Wednesday hearing before the House Financial Services Committee.
“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,” Powell added.
Per Reuters, Powell said Libra raised “many serious concerns” on consumer protection and financial stability. The Federal Reserve has formed a working group to monitor the coin’s development and is cooperating with other central banks. The US Financial Stability Oversight Council will also examine the project.
According to Powell, several concerns around Libra stem from the social media giant’s size, saying it “has a couple billion-plus users.”
Facebook has been rigorously criticized after publishing the Libra white paper, with regulators, finance ministers, and lawmakers worldwide asking the firm to suspend development until concerns about the project are addressed.
On Tuesday, Facebook’s blockchain lead and head of its subsidiary Calibra, David Marcus, answered some inquiries by the Senate Banking Committee.
However, Senator Sherrod Brown (D.-OH) was dissatisfied with Marcus’ responses, stating:
“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 is expected to testify in front of the Senate Banking Committee on July 16 as well as the House Financial Services Committee on the following day.