US Senate Libra Hearing Proves More Distrust In Facebook Than Cryptocurrency

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During the first day of testimony in the US Senate, it quickly became clear that the United States' Senate Banking Committee is very skeptical of Facebook trying to create a new currency. In contrast, there did not seem to be too much protestation against cryptocurrencies in general. 

Committee chair Rep. Maxine Waters, is leading the hearing, labeled "Examining Facebook's Proposed Cryptocurrency and Its Impact on Consumers, Investors, and the American Financial System." She was the representative that spoke out candidly against Libra on its official announcement.

Walters, in Day two of the hearing, also reiterated many of Facebook's past indiscretions, stating that Facebook: "demonstrated pattern of failing to keep consumer data private on a scale similar to Equifax."

Putting Facebook to task

Facebook has faced the US Senate before, primarily over issues of data protection. Their failings in this regard have enough of a tangible link as to be relevant to dealing with a financial tool.

Walters even brought up allegations that Facebook allowed malicious Russian state actors to purchase and target ad which purportedly influenced the 2016 US presidential elections.

Part of the legislative power behind Walter's and the senate is a recently surfaced bill called "Keep Big Tech Out of Finance Act." The goal of this bill would be to prevent large tech companies like Facebook from creating their own digital assets. 

The draft reads:

"A large platform utility may not establish, maintain, or operate a digital asset that is intended to be widely used as a medium of exchange, a unit of account, store of value, or any other similar function, as defined by the Board of Governors of the Federal Reserve System." 

David Marcus Happy to comply

After this opening grilling by the senate, David Marcus, CEO of Facebook's crypto wallet Calibra, stressed that the social media giant would not launch the cryptocurrency project before they address all regulatory concerns. 

Some of these regulatory concerns involve major financial issues, such as  AML (anti-money laundering), and KYC (Know Your Customer). In the publications thus far from Facebook, there is no mention of how these will be dealt with in using the new cryptocurrency.

These are fundamental regulatory concerns that any financial institution would need to get right before launching, but with Facebook's stature and public image, these gaping holes in regulatory preparedness are only magnified. 

Furthermore, even though Marcus promises to comply fully before the launch of Libra, this senate hearing has outlined a bevy of regulatory hurdles that are still in the way of Facebook and its cryptocurrency project. 

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