Meta Faces Senatorial Scrutiny Over New Stablecoin Plans

Two US Democratic Senators, Elizabeth Warren and Richard Blumenthal, have sent a letter to Meta CEO Mark Zuckerberg seeking clarification on the company's reported plans to develop a new stablecoin. The letter, dated June 11, follows news that Meta has been engaging with crypto companies and hiring key talent to advance this initiative. The Senators expressed concerns about the potential risks associated with a tech giant like Meta controlling a private digital currency, including threats to competition, user privacy, and federal control of the US monetary system.

The Senators highlighted that Meta must clarify whether it intends to issue the stablecoin through its main operations or a separate entity. They also raised alarms about how the firm might exploit financial data from billions of users, potentially leading to surveillance pricing schemes, intrusive targeted advertising, or the monetization of sensitive private information through sales to third-party data brokers. The letter also cited Meta’s history of privacy violations and failures to combat scams on its platforms, warning that introducing a payments system into this ecosystem could magnify risks such as money laundering, consumer harm, and national security threats.

In response to these concerns, the Senators requested that Zuckerberg disclose which firms Meta has consulted regarding its stablecoin plans and whether it has lobbied Congress on related legislation. They also asked how the new effort differs from Meta’s abandoned Libra and Diem projects. In June 2019, Facebook announced Libra, a digital currency initiative intended to be a stablecoin backed by a basket of fiat currencies and government securities. However, it immediately attracted global regulatory scrutiny due to concerns about monetary sovereignty, competition with national currencies, privacy, money laundering, financial stability, and Facebook’s prior privacy scandals.

Due to political and regulatory resistance, many original backers exited the project, and Libra was rebranded as Diem in late 2020. The project shifted its goal to launch a single-currency stablecoin (USD-backed) instead of a multi-currency basket. However, U.S. regulators remained skeptical, and by early 2022, Meta’s Diem Association subsidiary sold off its assets to Silvergate Bank for approximately $200 million, marking the definitive end of Meta’s stablecoin ambitions to date. Ultimately, intense political and regulatory opposition made it practically impossible for Meta to launch such a product under the prevailing environment.

Zuckerberg has until June 17, 2025, to provide a full response to the new inquiry. The Senators' letter underscores the ongoing scrutiny and skepticism surrounding Meta's digital currency ambitions, highlighting the need for transparency and regulatory oversight in the development of stablecoins by major tech companies.