Fed chief pours cold water on Facebook cryptocurrency plan

Jerome Powell said Libra cannot go forward until various concerns are addressed

Existing regulations do not address digital currencies such as Libra.
Existing regulations do not address digital currencies such as Libra.

U.S. Federal Reserve Chairman Jerome Powell said on Wednesday that Facebook’s plan to build a digital currency “cannot go forward” until serious concerns are addressed, Reuters has reported.

The comments from the most powerful U.S. financial regulator underscored the growing regulatory hurdles facing Libra, which has drawn scrutiny from policymakers globally.

“Libra raises many serious concerns regarding privacy, money laundering, consumer protection and financial stability,” Powell said during his semi-annual testimony on monetary policy before the U.S. House of Representatives Financial Services Committee.

“I don’t think the project can go forward” without addressing those concerns, he added later.

Powell said any regulatory review of the project should be “patient and careful.” He noted that existing regulations do not address digital currencies.

Powell said the Fed has established a working group to follow the project and is coordinating with other central banks across the globe. He also expects a review from the U.S. Financial Stability Oversight Council, a panel of regulators charged with identifying broad risks to the financial system.

Facebook spokeswoman Elka Looks said the social media giant is “very much aligned with the Chairman around the need for public discourse on this.”

“This is why we along with the 27 other Founding Members of the Libra Association made this announcement so far in advance, so that we could engage in constructive discourse on this and get feedback.”

Powell noted that he supports financial innovation as long as appropriate risks are identified, but he said the massive platform enjoyed by Facebook immediately sets Libra apart from other digital currency projects.

Any problems that could emerge through Libra “would arise to systemically important levels just because of the mere size of Facebook.”

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