Facebook’s efforts to garner support for the launch of a global cryptocurrency, Libra, hit another snag during a contentious House committee hearing Wednesday.
What exactly is Libra, lawmakers wanted to know. Some compared it to a bank, a commodity or an exchange traded fund.
It’s not a bank, or an exchange traded fund, but it is similar to a commodity, David Marcus, who heads Calibra, Facebook’s cryptocurrency subsidiary, told the House Financial Services Committee. “We would like for Libra to be a digital, global currency, and to be one unit of digital currency for the whole world,” Marcus said during more than four hours of testimony.
That didn’t clear things up for some lawmakers.
“Which is it, fish or fowl? It seems more like a platypus to me,” Rep. Bill Huizenga (R-Mich.) said.
Facebook says the cryptocurrency would bridge a gap in the global financial system for people who lack access to traditional banking by allowing people to send and transfer money quickly — and with almost no fees. But just how it would be regulated in the United States and around the world is still unclear and could determine its ultimate success.
On Wednesday, French Finance Minister Bruno Le Maire joined Libra’s international skeptics, saying it could not move forward without strict rules. “There is also a concern about money laundering, there’s a concern about the funding of terrorism,” Le Maire told CNBC.
Facebook is facing increasing pressure on Capitol Hill, where a bipartisan chorus of lawmakers has questioned whether Libra would threaten government-backed currencies and jeopardize consumers’ data. Marcus defended the project before the Senate on Tuesday and faced equally skeptical House members on Wednesday.
Some Republicans praised Facebook’s innovation but still expressed doubts. “Just because we may not fully understand a new technology proposal does not mean we should immediately call for its prohibition,” said Rep. Patrick T. McHenry (N.C.), the ranking Republican on the committee. “But let’s face it, let’s be honest, it’s Facebook, and I’m skeptical.”
Facebook, which has been engulfed in controversy for more than two years, is facing widespread distrust in Washington. Some Democrats have called for breaking up the tech giant. Last week, the Federal Trade Commission approved a $5 billion settlement with the company over its privacy practices.
At Wednesday’s hearing, Committee Chairwoman Maxine Waters (D-Calif.) compared Facebook to two other companies that have faced scandals, Wells Fargo and Equifax. “It has already harmed vast numbers of people on a scale similar to Wells Fargo and demonstrated a pattern of failing to keep consumer data private on a scale similar to Equifax,” she said. Waters has unveiled draft legislation that would block big tech companies from getting involved with the financial system, potentially preventing Facebook from launching Libra.
Another Democrat, Rep. Carolyn B. Maloney (D-N.Y.), said Facebook should drop the idea altogether or at least agree to start with a small pilot program. “I don’t think you should launch Libra at all. The creation of a new currency is a core government function and should be left to democratically accountable institutions,” Maloney said.
Several Republicans questioned whether Facebook would prevent people already banned from using its social network from using Libra. “Can Milo Yiannopoulos or Louis Farrakhan use Libra?” Rep. Sean P. Duffy (R-Wis.) asked. Marcus said he didn’t know yet. (Earlier this year, Facebook banned Farrakhan and Yiannapoulos from its network for being “dangerous.”)
Facebook will not rush development of the cryptocurrency and has already started talking with potential regulators in the United States and around the world, Marcus said. “I believe we’re owning [our] mistakes and working hard in remedying them and working hard at improving on all fronts,” he said.
Rep. Brad Sherman (D-Calif.) equated Libra’s innovative potential to the Sept. 11, 2001, terrorist attacks. “Although this may do more to endanger America than even that,” he said.
Sherman also gave Libra another name. “If it finally happens, nobody’s going to call it Libra; they’re going to call it a Zuck Buck. This is Zuckerberg’s baby,” he said, referring to Facebook chief executive Mark Zuckerberg.