Facebook’s (FB) Libra Project faced the US Senate Banking Committee on Tuesday.
The panel was formed to scrutinize FB’s proposed cryptocurrency. FB executive David Marcus answered questions and concerns of government officials during the hearing.
Marcus is a French-born American entrepreneur. He was the former president of PayPal, and he is currently Facebook’s vice president of Messaging Products, heading the FB messenger team.
Senator Brian Schatz, the serving senior United States Senator from Hawaii, was one of the panel members who intensely questioned Facebook’s plan.
During the hearing, Senator Schatz interrogated Marcus, asking him why the company should enter the cryptoworld.
The senator ferociously referred to previous problems of the social media giant; specifically, the data privacy and security scandals that it faced.
Senator Kristen Sinema from the State of Arizona asked Marcus concerns regarding scams. Senator Sinema used an American and a Pakistani in her example, asking what if the American was scammed by a foreigner in an exchange; what measures the Libra association will take to avoid scamming.
Marcus answered that the association will work on how to educate the users of Libra to avoid scams. However, Senator Sinema rebutted what if the project aims to reach the poor and those who lack access to conventional banking systems, they are most likely to be vulnerable to scammers.
The Arizonian Senator also raised a very alarming concern brought in a report that the real risk of the Libra project is “crooked developers.”
Marcus left the question unanswered; some are wondering if the FB executive will answer it on coming hearings and discussions.
A question regarding terrorism was raised by New Jersey Senator Bob Menendez. The senator posted a hypothetical scenario asking if Libra would freeze assets and transactions if terrorists were identified.
The FB executive answered that Libra and Calibra will hold the user’s account.
Bitcoin in the Picture
The king of the cryptosphere was also mentioned during the session. Bitcoin was pinned down and used for comparison with FB’s Libra Project.
Senator Chris Van Hollen pointed out Bitcoin’s volatility, saying that it was difficult to use the cryptocoin in widespread use, unlike the Libra which is specifically designed for widespread use.
David Marcus portrayed FB’s take on the digital currency as an opening to include the less fortunate and underserved populations to the financial system.
The former PayPal president showed the contrast between Libra and Bitcoin; Bitcoin’s volatility properties can be easily affected by geopolitical influence, whereas the Libra project is backed up by the Libra Association.
The Libra Association is currently made up of 28 organizations, including FB. Although, it is looking to have 100 members in the future.
Marcus kept assuring that policymakers need not to worry about Facebook because it is only 1 of 28 members.
The association also promises that it will work hand in hand with the United States Federal Reserve and other central banks on the globe. Adding that it will not compete with other currencies and it will not interfere with countries’ monetary policies.
The group said that the project will not push through as long as concerns by critics and government officials have not been answered. The association chose its headquarters in Switzerland; however, it will still be regulated by the US government.
Marcus is also set to meet the House Financial Service Committee on Wednesday.
- Trading Instrument