Recently, the social media giant, Facebook announced its plans for introducing a new cryptocurrency, Libra. However, the company didn’t discuss how this new Cryptocurrency could change and its impact on banking and financial establishment. As a result, Politicians were slowly alert to this danger and demanded, Facebook executives meet with congress. The congressional hearings were scheduled for July 16th and 17th.
On July 16th, Tuesday, Facebook was found under fire from Congress. The head of Calibra, David Marcus told the Senate Banking Committee that, Facebook will only build its own Calibra cryptocurrency wallet into Messenger and WhatsApp, and will refuse to embed competing wallets.
Meanwhile, the Q&A session between Senate Banking Committee and Facebook executive David Marcus begun.
Highlights from Libra Hearing
Initially, when asked why Facebook is launching Libra? Marcus stated that blockchain technology is inevitable and if the U.S. doesn’t lead in building and regulating it, the tech will come from places “out of reach of our national security apparatus,” raising the spectre of China.
Catherine Cortez Masto, a Nevada Democrat questioned how the company will protect against money laundering and assure terrorists don’t use Libra to finance their activity. Marcus responded saying that: digital transactions with Libra currency will be better than cash in guarding against criminal activities.
He continued saying that, cash transactions are where most crime happens. Marcus pointed out that it will be better if a lot of transactions move to digital. He claimed that people who use Libra through Facebook’s upcoming Calibra wallet will have to upload a government ID for verification.
Further, Sen. Sherrod Brown of Ohio, the senior Democrat on the Senate Banking Committee, stated that:
“Facebook is dangerous!,” it’s hard to trust Facebook after a series of privacy scandals. It “takes a breathtaking amount of arrogance” to think it can run its own bank.
Sherrod Brown asked Marcus that the plan wouldn’t risk the privacy of its billions of users’ data. Marcus assured that Facebook will take the time to get this right and welcomes an extensive review by federal regulators.
Later, Brown asked Marcus, whether he and his team would accept their salary in the Libra. Marcus explained Libra is not meant to compete with bank accounts but he said “YES, I would trust all my assets in Libra.”
Committee Chairman Mike Crapo, an Idaho Republican, questioned why Facebook wants to base the project in Switzerland. Marcus replied saying, it’s not an attempt to avoid oversight but that Switzerland is a recognized international finance center. Marcus says if the U.S. fails to act, then digital currencies could be controlled by others with dramatically different values.
Republican Sen. Martha McSally of Arizona said:
“The core issue here is trust.” Users will never choose to provide their personal data when joining the new digital wallet for Libra. She further added “Arizonans will be more likely to be scammed” using the currency.
Marcus repeatedly stated that Facebook did not intend to combine data on the user’s social activity with information on how they use the payment system.”To earn people’s trust we will have the highest standards for privacy, the way we’ve built this is to separate social and financial data.”
On the other hand, Facebook had its strong defenders of the project too. Some senators highlighted the major benefits of Facebook’s plan. They pointed out that, the launch of Libra is meant to bring money transacting at low cost to billions of users across the globe who don’t have bank accounts.
Although, there were a few unanswered questions of how much Facebook has invested in the Libra project and what data it will gather from transactions via its social network. David Marcus tried hard to get Congress on his side. He also assured that Facebook would not start offering Libra until major regulatory issues are dealt with.
Overall, considering all the things, the session was surprisingly Logical. Many Senators showed strong base knowledge of how Libra worked and asked valid questions.