Facebook co-founder Chris Hughes sure is an interesting person to talk to about Facebook.
Hughes, who still considers his university roommate Mark Zuckerberg a friend, has said Zuckerberg is too powerful and that the company should be broken up. This week, Hughes warned that Facebook’s new planned digital currency Libra would shift monetary power to corporate giants.
“Move fast and break things — our mantra in Facebook’s early days — was an appropriate slogan for a college social network,” Hughes wrote today in an op-ed for the Financial Times. “It’s not appropriate for the global monetary system.”
The US Senate Banking Committee is set to scrutinise Facebook’s cryptocurrency ambitions at a hearing set for July 16, Reuters reported on Wednesday, in yet another sign that legislators are extremely wary (to put it mildly) of the company’s shift into global financial services.
The Switzerland-based Libra Association, a group composed of Facebook and its global corporate partners with an entry fee of $US10 million ($14 million), will be making all the governance decisions surrounding this new global currency.
Hughes, who left Facebook in 2007, tweeted today that Libra is both “brilliant and frightening” because it shifts crucial power into the hands of private companies. In the Financial Times op-ed, he wrote:
Let us imagine that Libra works as planned. Hundreds of millions of people around the world will be able to send money across borders as easily as they send a text message. The Libra Association’s goals specifically say that ability will encourage “decentralised forms of governance”. In other words, Libra will disrupt and weaken nation states by enabling people to move out of unstable local currencies and into a currency denominated in dollars and euros and managed by corporations.
Hughes is especially concerned about what a coin like Libra would mean for an emerging economy like Greece where, “if enough people trade out of their local currencies, they could threaten the ability of emerging market governments to control their monetary supply, the local means of exchange, and, in some cases, their ability to impose capital controls”.
He pointed to Greece’s economic turmoil and the government’s lack of control over their own currency as proof of the damage that can be rendered to local economies in those cases.
Unveiled this week, Libra is a digital currency set to launch next year governed by a group of up to 100 giant corporations including Facebook, Visa and Uber. Even though Facebook made a grand announcement on Wednesday, there are still a ton of questions to be answered both by Facebook itself and by regulators who are already pressing the Silicon Valley giant on their plans.
Hughes is cheering them on.
“If global regulators don’t act now, it could very soon be too late,” Hughes said.
“We look forward to responding to lawmakers’ questions as this process moves forward,” a Facebook spokesperson said in response to a request for comment on Hughes’ article.
Many regulators agree. Authorities in the United States and Europe have called for strong oversight, Rep Maxine Waters called for a total moratorium, and the US Senate Banking Committee will have a hearing on the new digital currency in July.
“Facebook is already too big and too powerful, and it has used that power to exploit users’ data without protecting their privacy,” Sen Sherrod Brown said in a statement on Wednesday when Libra was publicly announced.
“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.”