Consumer Groups Call for a Moratorium on Libra Until ‘Profound Questions’ Are Answered

Some 33 consumer and public-policy groups sent a letter Tuesday to five Congressional committees and federal regulators asking for a moratorium on the Facebook Inc.-backed Libra cryptocurrency.

“We call on Congress and regulators to impose a moratorium on Facebook’s Libra and related plans until the profound questions raised by the proposal are addressed,” says the letter. “We also urge Facebook to put its implementation of its plans for the new cryptocurrency, Libra, on hold until the Congress and regulators have an opportunity to assess and react to a far more detailed presentation than has yet been made public.”

Among the signatories are the Consumer Federation of America, Consumer Reports, the Economic Policy Institute, the Electronic Privacy Information Center, Public Citizen, U.S. PIRG, and the Woodstock Institute.

“Some of us believe a careful assessment will show that the proposal is too dangerous to be permitted to proceed,” the letter says. “Others of us believe it should be permitted if appropriate controls and rules are in place. Others of us are uncertain what we think in light of the long list of unanswered questions about Libra.”

The letter presents dozens of questions under the topics of governance, national sovereignty, and law enforcement, including tax policy, consumer protection, privacy, and competition and systemic risk.

Recipients included the chairpersons and ranking members of the Senate Banking Committee, the Senate Finance Committee, U.S. House Financial Services Committee, the House Energy and Commerce Committee, and the House Ways and Means Committee.

Facebook has 27 initial partners working on Libra, including major payments companies. The project also includes Facebook’s Calibra digital wallet.

House Financial Services Committee chairwoman Maxine Waters, D-Calif., in June called for a moratorium until Congress and regulators can examine the issues Libra poses. The committee’s Democrats on Tuesday sent a letter to Facebook’s top executives “requesting an immediate moratorium on the implementation of Facebook’s proposed cryptocurrency and digital wallet.” The panel has scheduled a July 17 Libra hearing, which will come a day after a similar hearing held by the Senate Banking Committee.

In a statement, Dante Disparte, head of policy and communications at the Libra Association, the entity that directly oversees the project, said “the Libra Association maintains that financial inclusion, regulatory harmony, and consumer concerns are not competing objectives, but rather work in lockstep with the association’s goals of offering a simple global currency and financial infrastructure that empowers billions of people. The lead-up to the launch of Libra in 2020 builds in the time for conversations with regulators and policymakers around the world to take their questions into account.”

Regulators getting the consumer groups’ letter included the U.S. Securities and Exchange Commission, the Federal Trade Commission, the Office of the United States Trade Representative, the Commodity Futures Trading Commission, the Federal Reserve, the Financial Stability Oversight Council, and the U.S. Treasury Department’s Financial Crimes Enforcement Network. Some European financial regulators have already expressed reservations about Libra.

Amy Zirkle, interim chief executive of the Washington, D.C.-based Electronic Transactions Association, the national payments-industry trade group, said in a statement that “Facebook’s announcement of the founding members of the Libra Association indicate how a strong and robust payments infrastructure works: Libra demonstrates the ongoing evolution of the payments industry enhanced by the collaboration and cooperation of multiple and diverse players. We await further details to learn how Libra will add to the ever-expanding payments ecosystem.”