Libra seems to be the new cuss word in Washington D.C.
After unveiling Libra and setting up the association to oversee its governance in Switzerland, Facebook probably thought they’d be taking more flights across the Atlantic. However, it looks like the layover in the US Captial is longer than expected.
On July 16, David Marcus, lead of the Libra project and VP of Messaging Products at Facebook, sat before the US Senate Banking Committee to discuss Facebook’s cryptocurrency project, and it wasn’t pretty. Senators from both parties unified with pressing questions about the privacy, security, and global concerns associated with Libra.
This is certainly not the first rodeo for Facebook executives in front of US Congressmen. But, the way the latest hearing went, it certainly won’t be the last.
Senators likened Facebook’s plan of entering the payments realm to a toddler burning the house down, calling Libra a “delusional” goal, and revisiting Facebook’s privacy problems. Arson comments and snide remarks aside, there were genuine concerns that the wide reach of the social media giant, coupled with its entry into the payments realm via a digital asset, would be a sovereign problem and not a case of a private company merely expanding its operations.
Senator Sherrod Brown, who during the Fed Chairman’s appearance before the House Finance Committee on Libra mulled big tech’s efforts to rival big banks, questioned the trust customers had in Facebook after its previous debacles and PR disasters. He opened his address by stating, “Facebook is dangerous,” and called out the social media company.
“Do you really think people should trust Facebook with their hard-earned money?…I just think that is delusional.”
He spoke out against not just Facebook’s payment plans, but also its nefarious advertisement algorithm, its ability to betray journalistic principles and create a facade of news stories. Brown also spoke of the Menlo Park company “manipulating our emotions.” The business model of Facebook, according to Sen. Brown, is to ‘intensify hate’ by the dichotomy of connecting people and making a buck. In short, the motto of Facebook is “Move Fast and Break Thing.”
Senator Brown added,
“We’d be crazy to give them a chance to experiment with people’s bank accounts, to use powerful tools they don’t understand like monetary policy to jeopardize hard-working Americans ability to provide for their family. This is a recipe for more corporate power over markets and consumers.”
Other Senators also reigned down on Marcus, visibly angry about last year’s privacy issues. Chairman of the Committee, Senator Mike Crapo, questioned the 2 billion strong “reach and influence” Facebook has, equating this to a global cause for concern. However, he appreciated Facebook’s endeavor to build a credit system that was cheaper and faster, despite criticizing the means.
The concept of cryptocurrencies coupled with a private company of Facebook’s reputation has made the Senators even more displeased. Senator Thom Tillis said that digital assets are still in the “wild wild west” phase due to a lack of regulations, while still maintaining that Libra could be a “good idea for us to explore.”
Other Senators including Senator Pat Toomey and Senator Mark Warner lauded the idea of blockchain-based payment system, adding that the regulatory backlash against Facebook and Project Libra was a bit “premature” and “misguided,” to some extent.
Throughout the accusations, Marcus maintained a pro-regulatory stance and added that Facebook would work with any governing body, both at home and overseas, to ensure that everything is by the book. Libra will not see the light of day, unless the “regulatory concerns” are addressed, stated Marcus after the hearing.
His post-hearing tweet reiterated the above sentiment,
The conversation was thoughtful and highlighted important issues we, and the @Libra_ Founding Members, will need to address. I want to reiterate here what I said before the Committee: We will take the time to get this right.
— David Marcus (@davidmarcus) July 16, 2019
Marcus is certainly adhering to the lawmakers’ repeated concerns; from the Fed Chair, to POTUS, to the Treasury Secretary and now the Committee, the Libra main-man seems to have his hands full at the moment. With the Senate hearing done, Marcus will sit before the US Financial Services Committee soon. And by the looks of things, his stint in Washington D.C. will go on for a while now. If I were Marcus, I wouldn’t book my flight to California just yet.