Could Facebook’s Crypto Break the Financial System? Congress Airs Fears

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money laundering and the financing of terrorist plots. In addition, it can enforce sanctions on other nations or individuals by freezing their bank accounts.

Members of Congress asked Marcus how that could change with Libra in use. “The currencies represented in the Libra Reserve will be subject to their respective government’s monetary policies—policies those governments will continue to control,’’ Marcus said in testimony prepared for the Senate Banking Committee. As for US-based Calibra, it would comply with US laws, he said. Competing wallets and other Libra-related services based in other countries would follow local laws there, Marcus said.

If it does nothing else, the Libra project has created a boatload of new homework for US legislators and regulatory agencies. Members of Congress are now preparing written questions to send to Facebook, and the company’s meetings continue with agencies belonging to the Financial Stability Oversight Council.

Concerns over Libra are confronting lawmakers while Congress is still grappling with a larger quandary—have tech companies such as Facebook, Amazon (NASDAQ: AMZN), and Google (NASDAQ: GOOGL) become so large that they have outsized influence on everything from social media and entertainment to commerce and politics? And if so, should US lawmakers look to break them up under the nation’s antitrust laws?

Facebook appears to be facing some strong headwinds before it can gain US approval for Libra. The Federal Reserve chair, the Treasury secretary, and President Donald Trump have all expressed reservations about the cryptocurrency project. But Facebook also has a cultural hurdle to overcome, because some Republican lawmakers see the company as a liberal Silicon Valley communications powerhouse that has allegedly tilted its content curation to discriminate against conservative messages and businesses such as gun manufacturers.

At the Senate Banking Committee hearing, Louisiana Congressmember Kennedy wondered whether Facebook could use its leadership position in the Libra network to set its own political or cultural agenda by controlling access to the digital currency it created.

“Facebook is really not a company anymore—it’s a country,’’ Kennedy said.

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