Facebook Commits to Comply With Financial Regulators and Suspend Cryptocurrency Launch Following Cleaver's Call for Government Oversight

(Washington, D.C.) – Today, Facebook sent a letter to United States Representative Emanuel Cleaver, II (D-MO) agreeing to his call to cooperate and furnish any information necessary for a review by federal regulators. Facebook also committed not to launch their cryptocurrency, Libra, until all regulatory concerns were addressed. Last month, Congressman Cleaver sent a letter to Treasury Secretary Steve Mnuchin, Facebook Chief Executive Officer (CEO) Mark Zuckerberg, Office of Financial Research (OFR) Director Dino Falaschetti, and Calibra CEO David Marcus to call for collaboration between Facebook, Calibra, and financial regulators before the cryptocurrency becomes available to the public.

"I appreciate Facebook's pledge to do right by American consumers while acknowledging the importance of working with federal regulators to root out any potential dangers that may come from their announced cryptocurrency," said Congressman Cleaver. "I'm hopeful that Facebook's cooperation with financial regulators will protect consumers and the broader economy from systemic harms as well as nefarious and pernicious actors."

In the letter to Congressman Cleaver, Facebook wrote:

"As you requested, Facebook agrees to furnish any and all information needed for any investigation or review FSOC and OFR may conduct as the Libra Association develops the Libra digital currency and Facebook develops the Calibra wallet….We want to get this right; we will not launch until we have addressed all US regulatory concerns."

On June 18, 2019, Facebook announced its plans to develop a cryptocurrency, named Libra, and a digital wallet to store this cryptocurrency, known as Calibra. To assist it in this venture, Facebook has enlisted 27 other companies and organizations to form the Libra Association, which is based out of Switzerland. These companies include an array of financial services institutions including Mastercard, Paypal, and Visa, and technology firms, like Uber, Lyft, and Spotify. Facebook announced a targeted implementation date of early 2020, to have recruited over 100 firms into the Libra Association. According to Federal Reserve Board Chairman Jerome Powell, in testimony on July 10, 2019 before the House Financial Services Committee, "Libra raises many serious concerns regarding privacy, money laundering, consumer protection and financial stability."

The Financial Stability Oversight Council (FSOC) and its Office of Financial Research (OFR) were established by the Dodd-Frank Wall Street Reform and Consumer Protection Act to prevent several potential sources of systemic risk from taking down the US economy. FSOC and OFR are responsible for monitoring financial stability and designating financial institutions as systemic risks. Upon designation, these institutions would be subject to heightened prudential regulation and the direct regulatory authority of other financial regulatory agencies. Three of the relevant factors used for designation include leverage, interconnectedness with other systemically important nonbank financial institutions (SIFIs), and whether a primary prudential regulator already has responsibility for the SIFI and the activity.

"I'm pleased the executives at Facebook understand the significant challenges and implications that come with this endeavor and have shown a willingness to work with Congress and financial regulators to protect the finances of American consumers and the integrity of our financial system," Congressman Cleaver said. "We have a lot of hoops to jump through and hurdles to leap, but their desire to be transparent in this process is a good start."

You can find Facebook's letter to Congressman Cleaver here and Congressman Cleaver's original letter to Facebook here.

Emanuel Cleaver, II is the U.S. Representative for Missouri's Fifth Congressional District, which includes Kansas City, Independence, Lee's Summit, Raytown, Grandview, Sugar Creek, Blue Springs, Grain Valley, Oak Grove, North Kansas City, Gladstone, Claycomo, and all of Ray, Lafayette, and Saline Counties. He is a member of the exclusive House Financial Services Committee; Chairman of the House Subcommittee on National Security, International Development, and Monetary Policy; member of the Select Committee on the Modernization of Congress; member of the Committee on Homeland Security; and a Senior Whip of the Democratic Caucus. For more information, please contact Matthew Helfant at 202-225-4535 or Matthew.Helfant@mail.house.gov A high-resolution photo of Congressman Cleaver is available here.