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Analysis & Opinion

How does this new cryptocurrency-based payment system work? US Senate asks Zuckerberg

After information got out regarding Facebook’s plan to launch a virtual currency, the US Senate is worried about how the social media giant is planning to safeguard its users.

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After information got out regarding Facebook’s plan to launch a virtual currency, the US Senate is worried about how the social media giant is planning to safeguard its users.

After information got out regarding Facebook’s plan to launch a virtual currency, the US Senate is worried about how the social media giant is planning to safeguard its users.

The Senate sent an open letter to the social media giant. The letter majorly dwelt on the financial and privacy aspects of Libra, Facebook’s crypto project. In its opening statement, the United States Senate Banking Committee noted that at the beginning of the year, it invited

“Feedback on the collection, use and protection of sensitive information by financial regulators and private companies in light of the immense growth and use of data for a multitude of purposes across the economy.”

The Senate also cited Facebook’s recent move to court financial institutions and companies dealing in selling of goods over the internet, to assist in bringing its cryptocurrency into the real world. Additionally, the letter observed that, in the past, Facebook had failed in safeguarding collected data.

Accordingly, the Senate wants the CEO of Facebook, Mark Zuckerberg, to show:

“How […] this new cryptocurrency-based payment system works, and what outreach has there been to financial regulators to ensure it meets all legal and regulatory requirements? What privacy and consumer protections would users have under the new payment system? What consumer financial information does Facebook have that it has received from a financial company?”

Additionally, through the open letter, the US Senate was curious to know how the social media giant stores and safeguards information obtained from other financial companies.

The US Senate also requested Facebook to shed some light on whether it has information of an individual’s “creditworthiness, credit standing, [and or] credit capacity” that it plans to use to target those qualified to receive product or service marketing.

Information about project Libra has been revealed by people familiar with the developments. However, Facebook has been on a hiring spree looking for people with a deeper understanding of cryptocurrency/blockchain technology like Christian Catalini, a crypto economist and a researcher with MIT.

Jason Lee is a writer for various crypto publications and manages a small team on Medium. His love of technology and inquisitive nature set him up with crypto back in early 2016 and he hasn’t looked back since. In his spare time, Jason enjoys rock climbing and wakeboarding.

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