US Federal Reserve Mayor Jerome Powell said on Wednesday that Facebook's plan to build a digital currency called Libra "cannot go on" until serious concerns have been raised, comments pushing the project and the price of the original cryptocurrency bitcoin.  The strong comments of the strongest US financial regulator highlighted the growing regulatory hurdles to the proposed crypto competition that has taken control of politicians globally.
"Libra raises many serious concerns about privacy, money laundering, consumer protection and financial stability," said Powell during his semi-annual testimony to monetary policy before the US Treasury representative.
"I don't think the project can move on" without addressing these concerns, he added later.
Powell said any legislative review of the project should be "patient and careful." He noted that existing rules do not fit into digital currencies.
"It's something that doesn't fit nicely or easily within our regulatory regime, but it may have a systemic scale," he said. "It takes a careful look, so I strongly believe that we all need to take our time with this."
"We are very much in agreement with the President on the need for public discourse on this", says Facebook spokeswoman Elka Looks in an email. "So, together with the 27 other Founding Members of Libra Association, we made this announcement so far that we could engage in constructive discourse on this and get feedback."
Powell's comments on Libra hit the price of bitcoin, which dropped as much as 7 percent during his three-hour testimony.
Last month, bitcoin rose to nearly US $ 1
It was unclear exactly how the Fed could lower the project, if desired, given the scary regulatory treatment of digital currencies, but Powell's perspective awakens. Facebook officials are scheduled to witness the project later this month in Congress, where senior lawmakers have raised privacy and other concerns.
"What Facebook is planning raises serious privacy, trade, national security and monetary concerns for consumers, investors, the US economy, and the global economy," said representative Maxine Waters, relying on the bank's panel.
Powell said the Fed has set up a working group to follow the project and coordinate with other central banks across the globe. He also expects a review from the US Financial Stability Oversight Council, a panel of supervisors responsible for identifying major risks to the financial system.
Powell noted that he supports economic innovation as long as appropriate risks are identified, but he said the massive platform enjoyed by Facebook immediately puts Libra apart from other digital currency projects.
"Facebook has a few billion plus users, so I think you have the opportunity for very broad adoption for the first time," he said.
Any issues that might arise through Libra "would occur to systemically important levels just because of Facebook's mere size."