Facebook’s Libra raises ‘serious concerns’, says Fed chairman

Jerome Powell, the chairman of the US Federal Reserve, has joined US lawmakers and consumer watchdogs in voicing concerns over Facebook’s recently unveiled cryptocurrency project Libra.

Members of the House Financial Services Committee last week urged Facebook to agree to a “moratorium on any movement forward on” Libra and its cryptocurrency wallet. The lawmakers said that that the project raised privacy, trading, national security and monetary concerns for not only Facebook’s massive user base, but also for investors, consumers and the broader global economy. This sentiment was echoed by a group of consumer watchdogs, who separately called for the US Congress to freeze development on Libra.

Yesterday, Powell expressed similar concerns before the House Financial Services Committee.

“Libra raises serious concerns regarding privacy, money laundering, consumer protection, financial stability,” Powell said, as quoted by CNBC. “These are concerns that should be thoroughly and publicly addressed.”

Facebook’s blockchain head David Marcus yesterday assured the policymakers that the company wants to work with regulators and lawmakers to address their questions and concerns about the project. Marcus is set to have separate hearings before the US Senate Banking Committee and the House Financial Services Committee next week.

Powell’s comments on Libra were followed by a significant downswing across the digital currency market. Major crypto coins, including Bitcoin (BTC), Ether (ETH), XRP and EOS, have seen big losses over the past 24 hours. BTC plunged to sub-12,000 levels just hours after it broke through the $13,000 mark yesterday.

According to eToro’s senior market analyst Mati Greenspan, it’s not clear whether the downswing was caused by Powell’s comments.

“It seems that the market wasn’t ready to break a fresh highs just yet, and (bitcoin) is now back near the low end of its most recent range” of $10,000 to $14,000, Greenspan told CNBC.

As of 16:23 BST, the Bitcoin price stood at $11,806.03, according to data from Coinmarketcap. The coin has lost 6.4% of its value in the past 24 hours.

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