On Tuesday during Facebook’s hearing with the senate committee, US lawmakers hammered Facebook executive, David Marcus, over Libra’s threat to privacy. House members challenged Facebook’s data privacy and questioned its capability over the Cambridge Analytica Scam.
David Marcus was questioned for over 5 hours concerning bringing banking services to under-served populations, and demanding more accountability to regulatory bodies. The tone of the hearing was overwhelmingly hostile and it was highlighted that Facebook does not yet have a clear path for Libra’s launch. Democratic representative, Carolyn Maloney said, “I don’t think you should launch Libra at all.” She argued that currency creation was a core government function and it should be left to democratically accountable institutions. It was also discussed why Marcus represented Facebook on an issue of such magnitude. Other questions raised included the choice of location for the project when its out of reach for the US legislation.
Facebook repeatedly stressed the fact that it would work with regulators to ensure users’ privacy, but as of Tuesday, the Swiss regulatory body responsible for its regulation had not heard from the company, it said. Lawmakers challenged the categorization of Libra as a not-for-profit organization. Multiple members asked how Facebook and the companies in the association, which include Uber, Lyft, MasterCard and Paypal, would profit from the currency, and Marcus said the companies joined the association because the “status quo is not working for too many people, and that people deserve better.”
The US Congress has always defended the Dollar and when asked how they would launch a global currency without undermining the power of the US dollar, or destabilizing the global economy, Marcus said “we do not want to compete with the dollar” but also said “we want Libra to be a digital global currency” and “one unit of digital currency for the whole world.”
He suggested that because the coin would initially be backed by financial holdings, more than half of which would be US dollars, the currency was less at risk of affecting existing currency values.
Lawmakers continued to press Marcus on Facebook’s violation of privacy in the past and said they wondered whether it would bar hate groups from using Libra. Sherman likened Libra’s innovation to terrorism and 9/11 saying that “We have been told by some that innovation is always good and the most innovative thing that happened this century is when Osama Bin Laden came up with the innovative idea of flying two airplanes into towers.”
Facebook was fined $5 B for privacy violations in the Cambridge Analytica scandal, it would be interesting to follow the proceedings on Libra coin and see what stand regulators take on this issue.
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