As Facebook CEO Mark Zuckerberg sought to allay lawmakers’ concerns Wednesday about the planned launch of a global digital currency, House Financial Services Committee Chairwoman Maxine Waters renewed her call to halt the launch and even suggested the company should be broken up.

During testimony before the committee, Zuckerberg acknowledged the planned 2020 rollout is a “risky project,” but said the cryptocurrency would provide a secure method for millions of Americans who don’t have bank accounts to make low-cost fund transfers.

“People pay far too high a cost, and have to wait too long, to send money home to their families abroad. The current system is failing them,”

The dome of the U.S. Capitol Building is seen on a bright day in Washington, U.S., Oct. 23, 2019. (Photo: Diaa Bekheet)

said in his prepared remarks.

Top financial regulators and lawmakers from both parties have voiced concerns the cryptocurrency could be used for illicit activity such as money laundering and drug trafficking.   

Some regulators are also concerned the enormous reserve created with money used to purchase the digital currency could supplant the U.S. central banking system and weaken the global financial system.

Zuckerberg addressed those concerns with an assurance the cryptocurrency, known as Libra, would not be introduced anywhere in the world “unless all U.S. regulators approve it.”

Waters, however, demanded that Zuckerberg stop plans to launch Libra until the company addresses numerous issues confronting its effect on consumers and the U.S. political system.

Waters called Libra “a new Swiss-based financial system” that could require a tax bailout. She also suggested Facebook has become too large and powerful.

“You have opened up a serious discussion about whether Facebook should be broken up,” Waters said as she listed a series of problems confronting the company in her opening remarks.

Waters also said after she scrutinized the company’s problems, “I have come to the conclusion that it would be beneficial for all if Facebook concentrates on addressing its many existing deficiencies and failures before proceeding any further on the Libra project.”

While the hearing’s focus was on the digital currency, Facebook’s policies and conduct also attracted congressional attention.

Committee members cited issues such as the company’s ad platform that has enabled housing discrimination, the dearth of employees with little civil rights experience, the company’s facilitation of foreign election interference and its treatment of political ads.

The embattled CEO last testified before Congress in April 2018, when he faced 10 hours of questioning over two days in the House and Senate on political consulting firm Cambridge Analytica’s misuse of Facebook customer data to interfere in the 2016 U.S. presidential election.

The scandal hurt Facebook’s reputation in Washington and fueled lawmakers’ concerns the company cannot be trusted to launch the digital currency to its 2.4 billion users.

Facebook responded to the increased scrutiny in Washington by bolstering its lobbying operation. Public filings show Facebook is on track to spend $12.3 million to influence the federal government during the first nine months of this year, compared to $12.6 million for all of 2018.

Facebook and other technology giants are being investigated by the Justice Department, the Federal Trade Commission and the House Judiciary antitrust subcommittee on allegations of abusing their market power to suppress competition.

 

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