Facebook Currency Libra Under Heavy Scrutiny, Senate Hearing

Libra, Facebook’s digital currency that it plans to roll out early next year, was met with hostility and heavy scrutiny at a Senate hearing on July 16.

Facebook Executive David Marcus explained at the hearing that the crypto-currency aims to provide a “safe, secure and low-cost way for people to efficiently move money around the world.” He also said that if the United States does not take the lead in digital currency, another country will—and perhaps one that does not share American values.

Libra, cryptocurrency
A small toy figure stands on representations of virtual currency in front of the Libra logo in this illustration picture, June 21, 2019. (Dado Ruvic/Reuters File Photo)

However, Democrat Sen. Brian Schatz (D-Hawaii) said at the congressional hearing that the question isn’t about whether the United States should lead; the question is, “Why Facebook?”

“Their motto has been move fast and break things,” said Sen. Sherrod Brown (D-Ohio). “They certainly have. They moved fast and broke our political discourse. They moved fast and broke journalism … Now Facebook might not intend to be dangerous, but surely they don’t respect the power of the technologies.”

Implementing Safety Measures

A widely shared view at the hearing was the potential use of the crypto-currency for criminal activity. The United States Treasury Department underlined this point on July 15.

“The Treasury Department has expressed very serious concerns that Libra could be misused by money launderers and terrorist financiers,” said the Secretary of Treasury Steve Mnuchin to reporters at the White House.

Treasury Secretary Steven Mnuchin
Treasury Secretary Steven Mnuchin addresses a conference on financial technology, or fintech, at the Federal Deposit Insurance Corporation in Arlington, on April 24, 2019. (Chip Somodevilla/Getty Images)

Mnuchin said that the company must implement measures to prevent money laundering and the financing of terrorism, as do traditional financial institutions.

Facebook did create Calibra, a subsidiary that will act as a “virtual wallet” for Libra, and according to Marcus, whoever uses Calibra will have to provide a government ID for verification.

Marcus acknowledged Mnuchin’s concerns and affirmed that Facebook’s plan is not to rush things.

“We will take the time to get this right,” he said.

The Libra association will be headquartered in Switzerland, to which he said was not to “not to evade any responsibilities of or oversight.” He explained that they chose the country because well-established organizations, such as the World Health Organization, the World Trade Organization, and the Bank of International Settlements are there.

“And despite the fact that the Libra association will be headquartered in Switzerland it will still register with FinCEN (Financial Crimes Enforcement Network) and as a result, will have oversight from U.S. regulators,” he added.

Facebook logo at the company's headquarters
File photo shows a Facebook logo at the company’s headquarters in Menlo Park, Calif, on March 28, 2018. (Marcio Jose Sanchez, File/AP Photo)

Mnuchin said Facebook has much to work on before the department is comfortable with Libra.

The Associated Press contributed to this article.

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