Congresswoman Sylvia Garcia recently published a response to recent changes made to Facebook Libra by the Libra Association. In her statement, she vowed to ensure that the SEC would regulate Facebook Libra as a security. The Libra Association published a post toning down some of the features of Libra to appease lawmakers and regulators globally. Besides that, the Libra Association has applied for a FINMA license in Switzerland.
Caving into Regulatory Pressure
The Libra Association has had a difficult time since it announced the launch of Libra. Since then, several important members have left the association. Some of those that have left the association include eBay, Visa, Mastercard, and PayPal. Most of them have cited regulatory concerns as their reason for leaving the association.
The project has also spooked several central banks globally. Central bankers are afraid that if Facebook launches Libra to its over $2.5 billion users, it could upend monetary policies globally. There are also fears that it could make it difficult for smaller economies to create coherent monetary policies, which could destabilize certain fiat currencies and entire economies. Besides that, regulators have raised antitrust concerns.
In her statement, Congresswoman Sylvia Garcia said that there were simply too many unanswered questions. For instance, she notes there is no clear reason for Facebook to be creating a cryptocurrency. Besides that, she notes there is no clear explanation of how the Libra coin would affect consumers and the global economy.
She notes that in the new whitepaper by the Libra Association, the Libra coin would still be backed by a basket of fiat currencies. Consequently, it does not address the concerns that she had raised with Mark Zuckerberg when he appeared before the Financial Service Committee.
According to her, the Libra Association had a chance to address concerns raised by the US Congress in the second whitepaper. However, she concludes that the association has not addressed the bipartisan concerns raised. She concluded by vowing to ensure Libra was regulated as a security by the SEC.
In November 2019, the Congresswoman tabled a bipartisan bill called the Managed Stablecoins Are Securities Act of 2019. Besides that, she is a member of the US House Committee on Financial Services, which is chaired by Maxine Waters, a fierce opponent of Facebook Libra.
Fierce Opposition in Congress
If Facebook Libra is ever going to launch, it will no doubt need the approval of the US Congress. While it could still go ahead and launch without the support of US lawmakers, it would be an uphill battle. The US wields a lot of power internationally and that would certainly complicate matters for the project. However, it is worth noting that Facebook has been engaging the services of lobbyists in a bid to convince lawmakers to accept the project. Consequently, there is still hope that the project could go ahead. Going by the statement made by Congresswoman Garcia, the Libra Association will likely need to make changes before Libra can launch.
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