Senators Criticize Meta’s Stablecoin Initiative, Highlighting Privacy Concerns and Regulatory Gaps

Democratic Senators Elizabeth Warren and Richard Blumenthal have addressed a letter to Meta CEO Mark Zuckerberg, expressing their concerns about the company’s renewed exploration into developing its own stablecoin.

The senators caution that Meta’s interest in digital currency, reminiscent of its previous Libra and Diem ventures, may introduce significant risks to financial privacy, market competition, and the integrity of national monetary systems.

Citing reports indicating that Meta has engaged with cryptocurrency companies and appointed a fintech leader to spearhead its stablecoin efforts, the lawmakers posited that this initiative, whether through direct issuance or alliances, could enhance the company’s control over financial transactions within its extensive user base of approximately 3.5 billion.

They voiced apprehensions that a Meta-associated stablecoin might foster greater surveillance of consumer transactions, hinder fair competition, and expose the public to potential financial repercussions. Drawing connections to the USDC’s depegging in 2023 and the resulting federal intervention, they highlighted the risk of taxpayers being burdened by the fallout of a possible run on a Meta-supported stablecoin.

In addition to financial instability concerns, the senators referenced the company’s track record of privacy breaches, antitrust scrutiny, and failures to protect users, especially minors. They argue that such a history makes Meta ill-suited to oversee a private currency framework.

The timing of Meta’s renewed stablecoin intentions is particularly relevant, coinciding with discussions in Congress regarding the GENIUS Act, which could enable major tech companies to issue digital currencies via loosely regulated subsidiaries. Warren and Blumenthal raised questions about whether Meta is attempting to sway legislators regarding the bill and sought clarity on whether the company aims to exploit regulatory gaps to establish dominance in a stablecoin issuer.

The letter also requests comprehensive disclosures by June 17, including a rundown of consulted crypto firms, targeted deployment platforms, and any lobbying efforts connected to the GENIUS and STABLE Acts. The senators demanded clarification on the distinctions between Meta’s current stablecoin initiatives and the earlier Libra and Diem programs, alongside an explanation of measures taken to resolve prior issues.

In a bid to counter what they perceive as an alarming overreach, the lawmakers inquired whether Meta would endorse amendments aimed at prohibiting major tech companies from issuing or managing stablecoins directly.