Facebook co-founder and chief executive officer Mark Zuckerberg may have to personally appear before Congress to testify on the social media giant’s Libra stablecoin efforts.
That development comes on the heels of the House Financial Services Committee, one of the U.S. Congress’s most influential bodies, inviting Facebook chief operating officer Sheryl Sandberg to testify before the committee on October 29th regarding the Libra cryptocurrency.
The catch? The committee said it will only move forward with that proposed Libra hearing if Facebook CEO Mark Zuckerberg will agree to testify on the stablecoin before January 2020. Whether Zuckerberg will accept the invitation, and thus whether the preliminary hearing will occur, is an open question for now.
Yet if the Facebook executives do end up testifying before the House in staggered fashion, it won’t be the first time company officials have appeared before Congress this year. To much ado, Facebook blockchain lead David Marcus already appeared before the Senate Banking Committee and the House Financial Services Committee over the summer.
PayPal Officially Out of Libra Association
Things haven’t gone smoothly for Facebook since they proposed the Libra back in June — to say the least, global regulators have piled on fast and hard since the project’s reveal. That dynamic has made the stablecoin mired from its very start.
At the beginning, one of the most impressive things about the social media company’s summer announcement was that major companies like Visa, Mastercard, and PayPal had agreed to join the Libra Association, the body that will govern the currency basket that comprises the actual Libra stablecoin.
But reports have been swelling in recent weeks that some of the Libra Association’s early prospects were getting cold feet. Those cold feet turned hot this week, as PayPal confirmed to on October 4th that the payments firm was leaving the association. A company spokesperson said:
“We remain supportive of Libra’s aspirations and look forward to continued dialogue on ways to work together in the future. Facebook has been a longstanding and valued strategic partner to PayPal, and we will continue to partner with and support Facebook in various capacities.”
The split comes after PayPal representatives failed to show up for a planned October 3rd meeting of the Libra Association. Moreover, another recent report from Bloomberg indicates that Visa, Mastercard, and Stripe are all considering whether they should move forward with the stablecoin project or not.
But for those who want out, there are those who want in. Executives at cryptocurrency exchanges like Binance and Coincheck have signaled their interest in joining the association in recent weeks.
U.S. Banks Very Skeptical of Libra
The Federal Advisory Council (FAC), which is comprised of representatives from a dozen large American banks who advises the Federal Reserve’s Board of Governors, just had a conference with the Fed and therein expressed serious skepticism toward Facebook’s stablecoin.
“Some Council members have suggested that, as consumers adopt Libra more deposits could migrate onto the platform, effectively reducing liquidity, and that disintermediation
may further expand into loan and investment services,” a summary of the Council’s arguments reads.
With that said, don’t expect America’s top banking institutions to just roll over while they perceive Facebook as encroaching on their territory. It will be incumbent on Facebook to prove to regulators that the Libra isn’t doomful for the financial status quo.
However, according to new leaks from a July Facebook meeting, CEO Zuckerberg said dealings with global regulators are going a lot more smoothly in private than they are in public:
“The public things, I think, tend to be a little more dramatic. But a bigger part of it is private engagement with regulators around the world, and those, I think, often are more substantive and less dramatic.”