Facebook is in for a rough ride with its Libra cryptocurrency project.
If that wasn’t clear from the president’s anti-cryptocurrency Tweets last week and Treasury Secretary’s comments on Monday that they are “a national security issue,” it was very obvious after the Facebook executive spearheading its Libra payment system was treated like a bipartisan punching bag in a hearing before the U.S. Senate Banking Committee on July 16.
Accused of everything from being untrustworthy and arrogant to undermining American democracy, Facebook’s David Marcus, who heads up the Calibra wallet it is building on Libra, was battered from both sides of the aisle.
The most memorable soundbites came from Sen. Sherrod Brown (D-Ohio), who called the social media giant dangerous and undeserving of Americans’ trust. [See 11:41 in C-Span’s coverage of the hearings.]
Riffing on Facebook’s “Move fast and break things” motto, Brown said “They moved fast and broke our political discourse, they moved fast and broke journalism, they moved fast and helped incite a genocide [referring to Myanmar], they moved fast and they’re helping to undermine our democracy. Now Facebook asks people to trust them with their hard-earned paychecks.”
At this point in Brown’s comments, C-Span cut to a wonderful shot of Marcus sitting there with a carefully neutral yet attentive expression that must have taken hours in front of a mirror to perfect.
The Senator added, “Like a toddler who has gotten his hands on a book of matches, Facebook has burned down the house over and over and called every arson a learning experience…It takes a breathtaking amount of arrogance to look at that track record and go, you know what we ought to next? Let’s run our own bank and our own for-profit version of the Federal Reserve, and let’s do it for the whole world.”
Republicans piled on.“I don’t trust Facebook,” said Sen. Martha McSally (R-Ariz.). “It’s because of the repeated violations of your users’ privacy, repeated deceit, and I am not alone.”
“Isn’t it true, and I really want your opinion,” asked Sen. John Kennedy (R-La.), “Facebook has chosen to advance a set of values in which truthful reporting has been displaced by flagrant displays of bullshit?”
Not everyone of the committee was quite this harsh. Sen. Mike Crapo (R-Utah), the committee chair, opened the hearings by recapping concerns and asking for answers rather than attacking.
He pointed to Federal Reserve Chairman Jerome Powell’s recent comments “about the cryptocurrency’s potential for inciting money laundering and financial instability problems.”
Crapo added that “[c]oncerns include, but are in no way limited to how the payment system will work, how it will be managed, and how libra, the Libra Association, Calibra, and Facebook will all interact, what consumer protections will apply, and potential implications for consumers with respect to financial loss from fraud or the project’s failure.”
As for Marcus, he did a yeoman’s job in his prepared comments and responses to questions, maintaining calm and repeating the company’s point that it designed Libra so that it would only have one vote out of 28—and eventually 100—in the cryptocurrency’s governing body, the Libra Association.
He also said all the right things about trust and privacy, saying “We know we need to take the time to get this right,” and “I know we have to earn people’s trust for a very long period of time.”
He also said Calibra is distinct from Facebook in order to keep social data separate from financial data, promising, “we’ve heard loud and clear that [Facebook users] don’t want those two types of data streams connected, so this is the way the system is designed.”
And, Marcus pledged that Libra would not launch until Facebook and the rest of the association’s members—which include Visa, PayPal, and Uber, as well as cryptocurrency exchange Coinbase, secure storage and wallet provider Xapo, and venture capital firm Andreessen Horowitz—have “fully addressed regulatory concerns and received appropriate approvals.”
He did get some support. Sen. Patrick Toomey (R-Pa.) urged his colleagues to explore the benefits Libra could bring, not just the risks that come with it.
“To announce in advance that we have to strangle this baby in the crib, I think, is wildly premature,” he said.