Released: Facebook’s Testimony for Senate Hearing on Controversial Libra Project

Written testimony by David Marcus, Facebook’s head of blockchain, has been released.

Marcus is scheduled to be grilled by Congress on Tuesday and Wednesday at two separate hearings set by the U.S. Senate Banking and House Financial Services Committees, as lawmakers tackle the tech giant’s controversial digital asset Libra, its Swiss-based Libra Association and its quest to initiate financial services under its newly formed, FinCEN-registered subsidiary Calibra.

Much of the crackdown on Libra weighs on Facebook’s track record of mishandling user data and the company’s apparent “sprint” to launch its new digital asset without a full reckoning.

Marcus writes,

“To be clear, the Libra Association expects that it will be licensed, regulated, and subject to supervisory oversight. Because the Association is headquartered in Geneva, it will be supervised by the Swiss Financial Markets Supervisory Authority (FINMA). We have had preliminary discussions with FINMA and expect to engage with them on an appropriate regulatory framework for the Libra Association. The Association also intends to register with FinCEN as a money services business.

The Libra Association is similarly committed to supporting efforts by regulators, central banks, and lawmakers to ensure that Libra contributes to the fight against money laundering, terrorism financing, and more.”

Several factors are at stake. First, Libra’s 2020 launch date is expected to be impacted by the outcome of the hearings. Since Libra is a stablecoin pegged to a basket of fiat currencies, the U.S. Security and Exchange Commission could decide that it meets the threshold for regulation, just like an exchange-traded fund (ETF). If so, Libra could languish, becoming another blockchain-based product seeking approval, along with several Bitcoin ETF applications that have yet to be approved by the SEC.

Second, Libra may be subject to a new draft bill discussion designed to prohibit big tech companies from issuing a digital asset and engaging in the financial services industry.

Third, the hearings could impact the overall cryptocurrency market as perceptions equate a win for Libra as a boost for Bitcoin and crypto, with an unfavorable outcome indicating more friction between regulators and crypto-related products and businesses.

Marcus, however, is focused on maintaining control over Libra’s launch and assuring US lawmakers that Facebook has gotten the message and that it is prepared to act responsibly.

“In fact, I expect that this will be the broadest, most extensive, and most careful pre-launch oversight by regulators and central banks in Fintech’s history. We know we need to take the time to get this right. And I want to be clear: Facebook will not offer the Libra digital currency until we have fully addressed regulatory concerns and received appropriate approvals.”   

You can check out Marcus’s full written statement here.

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