U.S. Senators start blasting away at Libra, Facebook, and all things crypto


U.S. Congressional hearings are never fun events for those asked to attend. The opportunity for elected officials to preach whatever gospel they perceive that their political bases want to hear is just too great to ignore. They need to keep their voters back home cheering them on to greater stardom, or so it seems when controversial topics are on the agenda. Facebook and its Project Libra certainly fit the definition of controversy and provided quick political fodder for Senators in Congress this week.

David Marcus, Facebook’s lead for the Libra cryptocurrency and the sole representative designated to take the heat from an angry group of senators, more than likely never knew that he was cruising for a bruising. The hearing began softly enough, as Senator Crapo, a Republican from Idaho, expressed his hope that Libra would produce “material benefits, such as expanding access to the financial system… and providing cheaper and faster payments.” Unfortunately, from cautious optimism, it quickly went downhill.

Per one report:

From Senators questioning the age-old privacy problem of Facebook to calling Libra outright delusional, they reigned down on David Marcus, lead of the Libra Project and VP of Messaging Products at Facebook. The aging US lawmakers were concerned about Libra’s plan to overhaul national currencies and manipulate monetary policies, and with the “massive reach” of Facebook, that prospect looks even more menacing.

Marcus obviously was one man taking a bullet for the team, so to speak. He steadfastly defended Libra, blunting every assault by reiterating that the project team will seek every regulatory approval necessary and work closely with regulators across the globe to satisfy any concerns that they might have. Senators, however, were not easily convinced, continually citing Facebook’s previous bad behavior regarding privacy and poor monitoring of offensive content and advertising misrepresentations.

Facebook apparently has few friends on Capitol Hill, although there was one lone voice that called for open-mindedness. Senator Toomey, after acknowledging the “tremendous potential advantages in blockchain technology,” counseled his colleagues to attempt to remain open-minded: “We should explore this with a prudent approach,” while he warned other Senators not to, “strangle this baby in the crib.”

But Senators were on a mission to send several salvos across Facebook’s bow, as these comments convey:

  • Senator Schatz (D-HI): “Maybe before you do a new thing, an enormously important thing, you should go ahead and first make sure you’ve got your own shop fixed.”
  • Senator Brown (D-OH): “Look at Facebook’s record. We would be crazy to give them a chance to experiment with people’s bank accounts and to use powerful tools they don’t understand, like monetary policy, to jeopardize hardworking Americans’ ability to provide for their families… They don’t respect the power of the technologies they are playing with, 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’.”
  • Senator Chris Van Hollen (D-MD): “When you’re talking about a world currency potentially being used by billions of people, I’m not sure there is sufficient accountability you could build into that system.”
  • Senator Kennedy (R-LA): “Truthful reporting has been displaced with flagrant displays of bullshit. Facebook wants to control the monetary supply. What could possibly go wrong?”

The specter of Facebook and Libra controlling anything, much less global capital flows, is in a word “terrifying” for most senators, leading many to almost embrace Bitcoin as a cryptocurrency that deserves their approval, but it has not been a good week in D.C. for advocates of Facebook and, by association, Libra.

One observer noted:

Over the past two weeks, Facebook has received a wave of criticism from the likes of the Federal Reserve Chair, the House Financial Services Committee, the Treasury Secretary, the Senate Banking Committee, and even the President himself. While Libra’s bright future has turned darker, or at least delayed, Bitcoin’s present is back in the red.

To many it seemed like a coordinated conspiracy. At another venue, U.S. Treasury secretary Steven Mnuchin told reporters:

This is indeed a national security issue. Cryptocurrencies such as bitcoin have been exploited to support billions of dollars of illicit activity like cyber crime, tax evasion, extortion, ransomware, illicit drugs, and human trafficking. Facebook’s Libra could be misused by money launderers and terrorist financiers.

As for “Bitcoin’s present is back in the red”, the markets were not pleased. Bitcoin took a 13.3% dive, its second largest for the year, as analysts suddenly turned cold over near-term prospects. BTC currently sits at $9,660. At the same time, analysts acknowledged that long-term traits remain favorable, and it actually appears as if politicians are softening their stance toward Bitcoin. One comment says it all: “This will be a long process, but this week is one of the biggest turning points in Bitcoin’s history.”

Might as well want to check…

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