Senators Slam Meta’s Stablecoin Push, Cite Privacy Risks and Regulatory Loopholes

Democratic Senators Elizabeth Warren and Richard Blumenthal issued a letter to Meta CEO Mark Zuckerberg, elevating issues over reviews that the tech large is as soon as once more exploring the launch of its personal stablecoin.

Within the letter, the senators warn that Meta’s renewed curiosity in digital foreign money, harking back to its failed Libra and Diem initiatives, might pose severe dangers to monetary privateness, financial competitors, and nationwide financial sovereignty.

Zuckerberg Pressed on Stablecoin Technique

Citing current reviews that Meta has been in discussions with crypto companies and employed a fintech government to guide its stablecoin push, the lawmakers argued that any such transfer, whether or not via direct issuance or strategic partnership, would permit the corporate to tighten its grip over funds throughout its huge 3.5-billion-user ecosystem.

The senators categorical concern {that a} Meta-backed stablecoin might permit deeper surveillance of consumer transactions, threaten competitors, and expose customers to systemic monetary instability. Drawing parallels with the 2023 depegging of USDC and the following federal backstop, they warn that taxpayers could once more be compelled to shoulder the results of a run on a Meta-linked stablecoin.

Past monetary danger, the letter additionally outlined the corporate’s historical past of privateness violations, antitrust investigations, and failure to safeguard customers, particularly kids, from hurt, and argued that such a file makes the corporate uniquely unfit to handle a non-public foreign money system.

The timing of the corporate’s revived stablecoin ambition can be vital, coming as Congress debates the GENIUS Act, which might pave the way in which for Large Tech to subject digital {dollars} via evenly regulated associates. Warren and Blumenthal query whether or not Meta is lobbying lawmakers to affect the invoice’s language and search clarification on whether or not the corporate is attempting to take advantage of regulatory loopholes to achieve a controlling stake in a stablecoin issuer.

Meta Faces June 17 Deadline

The letter additionally calls for detailed disclosures by June 17, together with an inventory of consulted crypto companies, supposed platforms for deployment, and lobbying exercise associated to the GENIUS and STABLE Acts. The senators have referred to as on the tech firm to clarify how its present stablecoin plans differ from the Libra and Diem initiatives and what steps have been taken to deal with previous issues.

In a transparent pushback towards what they see as a harmful overreach, the lawmakers ask whether or not it will help amendments to dam Large Tech companies from issuing or controlling stablecoins explicitly.