Existing Laws
Marcus, whose preparation has included a mock hearing, is expected to address a number of points in his testimony. He’s likely to stress that while Facebook has spearheaded the Libra project, it’s not acting alone. The company has said that it envisions a governing body that would include at least 100 organizations. There are currently 28 listed as founders for the Libra Association, although none has paid the $10 million entrance fee.
Marcus is also likely to try to convince lawmakers that the company is open to regulation and is prepared to discuss how Libra’s oversight could fit into existing laws. He may warn that if the U.S. squashes Facebook’s plan, other countries, like China, could step in and build their own tokens without input from Washington. The People’s Bank of China has already said it’s developing a digital currency.
Facebook has been making similar arguments in briefings with lawmakers and congressional aides, according to interviews. The major companies that have partnered with Facebook on the project, including Mastercard Inc., Visa Inc. and Uber Technologies Inc., have been mostly silent about Libra and largely absent from the lobbying effort.
Few details on Libra have been disclosed beyond a 12-page white paper issued in June, which said Libra will be built on a new blockchain infrastructure accessible from anywhere in the world. Facebook and its partners have set up a non-profit organization in Switzerland to oversee the payment network. The token will be backed by a reserve of bank deposits and short-term government securities.
Trump, in his tweets last week, said he’s “not a fan” of digital coins in general because of their potential use in criminal activity. As for Libra, Trump wrote that it “will have little standing or dependability.” He added that if Facebook really wanted to get into finance it should become a bank -- and be regulated like one.
Though the price of Bitcoin and some other cryptocurrencies has gained on the surge in mainstream interest in the concept, a number of competing digital coin companies are distancing themselves from Facebook. Some industry groups are also conducting briefings for congressional staff, pointing out that Facebook’s plan is light on details and not necessarily representative of all tokens.
Libra is more of a “company-issued asset” rather than than a true cyptocurrency like Bitcoin, said Coin Center Executive Director Jerry Brito, who’s been involved in some of the meetings on Capitol Hill. A key complaint among purists has been that Libra isn’t decentralized. “There is no company that issues Bitcoin,” Brito added.
$5 Billion Settlement
Blockchain Association Director Kristin Smith, whose group represents several large crypto companies, said she’s generally not opposed to Facebook’s entrance into the market. She acknowledged, however, that there’s a lot of potential risk.
“It’s mixed,” she said. “We certainly don’t want the whole industry to become associated with some of the issues that Facebook has had as a company in the past.’’
Along with complaints that it allowed Russia to hijack its platform to support Trump’s election campaign, the company has also drawn fire for numerous consumer privacy breaches. The $5 billion FTC settlement, which still needs final approval from the U.S. Department of Justice, resolves an investigation stemming from Facebook’s involvement with Trump campaign consultant Cambridge Analytica.