Facebook is still working on its responses to a plethora of consumer protection questions about the Libra cryptocurrency asked by a group of U.S. senators last month.
The Senate Banking Committee wrote an open letter to Facebook at the beginning of May, asking the social media giant a number of questions about Libra, after word of the project leaked out in the press. The questions primarily centered around user privacy and data protection, though a few concerned the cryptocurrency network itself.
After months of speculation and rumors, the company formally unveiled its vision for Libra on Tuesday – but it has not yet submitted a response to the letter.
“We received the letter and are addressing the senators’ questions,” a Facebook spokesperson told CoinDesk Tuesday morning.
To be sure, the documentation Facebook published offers a hint of what the answers to some of the committee’s questions might be.
Take, for example, the senators’ first two questions:
- How would this new cryptocurrency-based payment system work, and what outreach has there been to financial regulators to ensure it meets all legal and regulatory requirements?
- What privacy and consumer protections would users have under the new payment system?
Facebook’s new Libra white paper and supporting documentation outline the mechanism for the basket of fiat currencies and government securities that back the Libra token, as well as the Libra investment token that gives its governance council the ability to monitor and modify the network and its protocols.
Moreover, Facebook said in other documentation that it, or at least its new Calibra subsidiary, would secure money transmitter licenses in various U.S. states that treat cryptocurrencies as money. Calibra has also registered as a money services business (MSB) with the Financial Crime Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury. (Though it is a legal requirement for businesses conducting financial transactions, registering as an MSB does not indicate any sort of regulatory approval.)
Calibra says it will also abide by European Union and Financial Action Task Force (FATF) guidelines, as well as the laws of each jurisdiction it provides services in. Facebook has also reportedly held talks with the Commodity Futures Trading Commission (CFTC) about Libra.
The Senators also asked if Facebook shares or sells any consumer information (or information derived from such data) with any unaffiliated third parties. Company literature says that neither Facebook nor Calibra will do so without consent from the customer.
Still, the senators may want more detailed answers to these questions and others, specifically:
- What consumer financial information does Facebook have that it received from a financial company?
- To the extent that Facebook has received such information, what does the company do with it and how does it safeguard the data?
- Does Facebook have any information bearing on an individual’s (or group of individuals’) creditworthiness, credit standing, credit capacity, character, general reputation, personal characteristics or mode of living that is used (either by Facebook or an unaffiliated third party) to establish eligibility for, or marketing of a product or service related to, credit, insurance, employment or housing?
- How does Facebook ensure that such information is not used in violation of the Fair Credit Reporting Act?
The senators’ letter did not give a deadline for Facebook to respond, and it is unclear when the answers will be sent.
UPDATE (June 18, 2019, 18:45 UTC): Senator Sherrod Brown, ranking member of the Senate Banking Committee, said on Twitter that “Facebook is already too big and too powerful, and it has used that power to exploit users’ data without protecting their privacy. We cannot allow Facebook to run a risky new cryptocurrency out of a Swiss bank account without oversight.”
Facebook CEO Mark Zuckerberg image via Shutterstock