US Senate Banking Committee Requests Clarification on Facebook Cryptocurrency

US Senate Banking Committee Requests Clarification on Facebook Cryptocurrency



US Senate Banking Committee Requests Clarification on Facebook Cryptocurrency

The CEO of social media giant Facebook, Mark Zuckerberg was sent an open letter from the United States Senate Committee on Banking, Housing, and Urban affairs, containing inquiries on the impact of Facebook’s new cryptocurrency relative to user’s privacy and data protection.

Per the letter, the Senate Banking Committee recently had its first hearing on Privacy Rights and Data Collection in a Digital Economy, following a feedback initiative conducted early this year on user’s information collected by financial parties, in order to assess the possible legislative infrastructure to trail as the digital asset industry grows.

Facebook came on to the committee’s radar while it sought out financial firms and online merchants to help launch its cryptocurrency. Moreover, according to the letter experts had expressed their concerns about Facebook’s privacy policy and practice, hence, the committee raised some questions of their own to determine whether or not the best privacy methodologies are being used.

The main questions revolved around how Facebook’s new cryptocurrency will work, and the status of Facebook’s consultations with financial regulators to ascertain the legal and regulatory implications of such a digital currency. Other questions involved Facebook’s privacy practices including data collection methodology, the use of collected data – especially as related to third-party systems, and the security of the data obtained from users.

No response to the questions sent to Facebook has been made public since the letter was sent on 9 May. However, considering that several privacy-related allegations that put the company in the spotlight for the most of 2018, which rippled into several data and privacy policy checks, Facebook’s handling of the situation will impact its crypto pet project.

It appears the social media giant may also be facing other daunting situations involving privacy matters elsewhere; which go on to intensify the importance of this letter. Moreover, speculations about the Facebook cryptocurrency to act as a stablecoin may attract even greater attention from regulatory bodies, given the recent scandal of major stablecoin Tether.

Facebook’s cryptocurrency codenamed ‘Project Libra’ has been in the works for a while now since the rumors surfaced last year, with the initial plan suggesting it would be a social cryptocurrency associated with its acquired social app WhatsApp. Recently, its recruitment activities have made frequent headlines, with the intention to loop-in financial institutions and online merchants to help push for the adoption of its cryptocurrency when launched.

Insights about the cryptocurrency being developed by Facebook are still vague and several parties close to the in-house project aren’t willing to share details about its developments due to binding non-disclosure. But one thing is certain, the Senate Banking Committee’s inquiry isn’t casual at all.

 

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