A week has passed since Mark Zuckerberg took the stand to be the sole witness testifying before the United States House of Representatives Committee on Financial Services about his Libra strategy and any recent developments. The majority of Congressmen took it upon themselves to blast the young entrepreneur on what they perceived as the evil deeds of Facebook, everything from refusing to police lies in political ads to issues of discrimination, diversity, and, oh yeah, privacy.
Reporters at Forbes also noted that: “As is typical of such hearings, an unabridged written testimony was submitted in advance so members of Congress and others could prepare their lines of questioning.” These prepared remarks also allowed analysts a chance to dig deeper into whatever fine-tuning has occurred since David Marcus, the head of the Libra project, took the stand so bravely back in June. The changes that were detected are minor in scope, but they do indicate a willingness to address concerns.
From the very beginning of his prepared statement, Zuckerberg appears to be deliberately repositioning the Libra project as a competitive response to China’s announced initiative to create a state-owned digital currency that can be used around the world. He stressed America first:
Libra will be backed mostly by dollars and I believe it will extend America’s financial leadership, as well as our democratic values and oversight around the world. If America doesn’t innovate, our financial leadership is not guaranteed.
President Xi of China also said last Thursday that his country must “seize the opportunity” that blockchain technology affords.
Rehash of Libra Association and Strategic Goals
After the Marcus testimony, four irate Congressmen wrote a letter to Calibra members, requesting they withdraw support from the association. Financial institutions complied, including Visa, MasterCard, and PayPal. Zuckerberg obviously felt the need to reiterate the differences between Libra tokens and the Calibra wallet, insisting that none of the user information held in the wallet would ever be sold to third parties. He then repeated his earlier warning: “If America doesn’t lead on this, others will. Foreign companies or countries may act without the same regulatory oversight or commitment to transparency.”
Discrimination and Diversity Issues
Facebook has come under fire in the press lately over discriminating housing ads and the lack of diversity in its pursuits. To counter these attacks, Facebook has formed an internal “civil rights task force”, which, hopefully, would assuage a few Congressmen to change their negative stance on the social media giant and its Libra intentions. Mark also stressed that the target users for Libra are the “under-banked”, which typically is comprised of women and “other underrepresented groups”, alluding again to the good intentions of Libra efforts. Per Mark: “I feel blessed to be in a position where we can make a difference in people’s lives.”
Zuckerberg reiterated once more that he had no intention of ever launching the product without regulatory approval at every step of the way, but various Congressmen have already been jumping the gun to put obstacles in the way, introducing as many as 21 bills related to blockchain developments. On the Friday preceding the hearing, however, three new bills were put forward that could seriously undermine any Fintech efforts, including those of Libra, in the cryptocurrency arena.
Jason Brett, CEO of the Value Technology advocacy group, was one of the first to speak out against these proposed legislative acts:
As Congress attempts to reign in Libra from its perceived impact to the strength of the U.S. dollar, policymakers are creating broad measures that has an impact beyond Facebook. If the three bills were actually passed, no Big Tech company could offer a cryptocurrency, all stablecoins will be treated as securities, and any company or its officers profiting from a stablecoin will face being de-listed from a stock exchange.
Are lawmakers just trying to throw their weight around to intimidate firms like Facebook? Do these laws have any chance of passing after legislative review? Hopefully, the voices of reason in Congress that promote innovation and America’s leadership will prevail.