US Senate Mulls Regulatory Implications of Facebook’s Mysterious Crypto Project

Recently, a buzz of excitement spread throughout the cryptocurrency community after news broke regarding social media giant Facebook’s foray into the crypto industry through a new project that may introduce the benefits of digital currencies to billions of the platform’s users.

Although this was certainly a bullish sign that many analysts viewed as the epitome of mainstream adoption for the nascent technology, the US Senate is now getting involved in the project, recently sending an open letter to the company demanding that they reveal significantly more information about the project, which currently remains somewhat mysterious.

Facebook Must Answer Several Questions Regarding Crypto Project

In a recent letter from the United States Senate Committee on Banking, Housing, and Urban Affairs, the committee demanded that the tech giant elucidate details about the project, specifically with regards to how the project may impact the digital privacy of users.

The letter, which is specifically addressed to Facebook’s founder and CEO, Mark Zuckerberg, also brings up the issue of possibly having to subject Facebook to the Fair Credit Reporting Act, which, according to the Federal Trade Commission, ensures that:

“The banking system is dependent upon fair and accurate credit reporting…” and that it utilizes an “An elaborate mechanism [that] has been developed for investigating and evaluating the credit worthiness, credit standing, credit capacity, character, and general reputation of consumers.”

On this note, one of the questions posed by the committee asks whether or not Facebook has been in contact with financial regulators to ensure that their crypto-based framework meets “all legal and regulatory requirements.”

Importantly, this letter signals that the regulation still remains as a hurdle that crypto must jump over before it can incur mainstream adoption, as major corporations looking to adopt the technology will likely have to deal with heavy involvement from the government and regulatory officials who may inhibit the speed at which crypto-based frameworks can be developed and released for public use.

Concerns Regarding Facebook’s Privacy Violations and Size Continue to Grow

Another key part of the letter is regarding what protections Facebook will provide that ensure the safety of any personal data that may be exposed as a result of using the crypto-based payments system.

“What privacy and consumer protections would users have under the new payment system?” the committee asked.

Concerns about Facebook’s aptness to exploit personal data come as one of the company’s co-founders, named Chris Hughes, is calling for the company to be broken up, saying in a recent opinion piece for the New York Times that:

“The company’s mistakes — the sloppy privacy practices that dropped tens of millions of users’ data into a political consulting firm’s lap,” referring to the Cambridge Analytica scandal.

Hughes further noted that “Mark’s influence is staggering, far beyond that of anyone else in the private sector or in government,” and concluded that “It is time to break up Facebook.”

As Facebook continues to grow and ventures into relatively new technologies, like crypto, in an effort to fuel their continuous growth, it is highly likely that calls to break up the tech giant will continue to surmount, and that the government will only grow keener on regulating nascent technologies.