Well, that didn’t take long! The U.S. Senate Committee on Banking, Housing, and Urban Affairs will hold a hearing about Facebook’s Libra project on July 16, 2019. Reuters reported that the hearing will explore the Libra project as well as any data privacy considerations it may raise.

This comes after Senate Banking Committee members wrote to Facebook asking for information on rumors about its cryptocurrency project in May of 2019. The Committee wanted to know how Facebook would protect consumer information.

Senator Sherrod Brown (Democrat – Ohio), ranking member of the Senate Committee on Banking, Housing, and Urban Affairs wrote “This new cryptocurrency will give Facebook competitive advantages with regard to collecting data about financial transactions, as well as control over fees and functionality”. He continued:

“Facebook is already too big and too powerful, and it has used that power to exploit users’ data without protecting their privacy. We cannot allow Facebook to run a risky new cryptocurrency out of a Swiss bank account without oversight. I’m calling on our financial watchdogs to scrutinize this closely to ensure users are protected.”

In addition, Representative Maxine Waters, (Democrat – California) Chairwoman of the U.S. House of Representatives Committee on Financial Services posted a statement about Facebook’s cryptocurrency. She wrote “I am requesting that Facebook agree to a moratorium on any movement forward on developing a cryptocurrency until Congress and regulators have the opportunity to examine these issues and take action. Facebook executives should also come before the Committee to provide testimony on these issues.”

My best guess is that Facebook failed to consider that creating its own cryptocurrency could result in questions from legislators. Either that, or Facebook decided it was better to ask forgiveness than permission with Libra.

Facebook announced Libra, its very own cryptocurrency powered by blockchain technology. It is also introducing Calibra, a digital wallet for Libra. The wallet will be available in Messenger, WhatsApp and as a standalone app. Facebook expects to launch these products in 2020.

For many people around the world, even basic financial services are still out of reach: almost half of the adults in the world don’t have an active bank account and those numbers are worse in developing countries and even worse for women. The cost of that exclusion is high – approximately 70% of small businesses in developing countries lack access to credit and $25 billion is lost by migrants every year through remittance fees.

I see a problem. People who don’t have bank accounts might not be able to afford a smartphone to access Calibra and the Libra cryptocurrency on. I suspect Facebook is aiming mostly at businesses and not-so-much on people who are poor.

Facebook says that Calibra will let you send Libra “to almost anyone with a smartphone, easily and instantly as you might send a message, and at low to no cost.” In time, Facebook hopes to offer additional services for people and businesses, such as paying bills with the push of a button, buying a cup of coffee with the scan of a code, or riding your local public transit without needing to carry cash or a metro pass.

According to Facebook, Calibra will use the same verification and anti-fraud processes that banks and credit cards use. There will be automated systems that proactively monitor activity to detect and prevent fraudulent behavior. If someone gains access to your account and you lose some Libra as a result, Facebook will offer you a refund.

What about privacy? Facebook says Calibra will not share account information or financial data with Facebook or any third party without consumer consent. Personally, I wonder exactly how that consent will be given. Will users have the choice to opt-in to giving consent? Or will Calibra require that consent before people can use it?

Facebook also says Calbra customers’ account information and financial data will not be used to improve ad targeting on the Facebook family of products. Given Facebook’s history, it would be wise to be skeptical of that claim.