In an American political arena that has become increasingly divided in recent years, Facebook’s Libra cryptocurrency is proving to be a uniting force.
Such divisiveness gave way to a rare display of bipartisanship in the U.S. Capitol on July 16th, when senators from both major American political parties grilled Facebook blockchain lead David Marcus in a Senate Banking Committee oversight hearing on the company’s proposed Libra stablecoin.
The committee’s Chairman Sen. Mike Crapo (R-ID) and Ranking Member Sen. Sherrod Brown (D-OH) set the tone for the hearing, with both congressmen’s introductory comments showing just how troubling the Libra is to some of America’s top legislators.
Libra Under the Microscope
“Concerns include, but are in no way limited, to how the payment system will work, how it will be managed, and how Libra, the Libra Association, Calibra, and Facebook will all interact,” Chairman Crapo noted at the beginning of the hearing.
For his part, Sen. Brown followed up with a considerably more scathing opening, giving the social media powerhouse no quarter. The Ranking Member said the nefarious track record of Facebook in recent years showed the company was poorly positioned to disrupt payments:
“Facebook is dangerous. Now Facebook might not intend to be dangerous, but surely they don’t respect the power of the technologies they are playing with, like a todder who has gotten his hands on a book of matches. Facebook has burned down the house over and over and called every arson a learning experience.”
What we learned from today's senate hearing and grilling of Mr. Marcus:
+ A bunch of Senators hate FB
+ A couple of them think the tech could be cool
+ Senators attuned to in weeds issues (Warner a good example)
+ Marcus is a skilled operator
+ There will be more hearings
— Palley (@stephendpalley) July 16, 2019
As the hearing progressed, David Marcus held his ground well enough, parrying the senators biting questions where he could and answering as diplomatically as possible where he couldn’t.
“Facebook will not offer the Libra digital currency until we have fully addressed regulators’ concerns and received appropriate approvals,” the head of Calibra said.
Indeed, Marcus implored the committee that Facebook would follow all necessary rules and wouldn’t dominate the token, adding at one point that the U.S. government should want such a project to occur within in its purview rather than beyond its direct reach.
Little Settled for Now
While some senators were open-minded to the possibilities of Libra, Marcus wasn’t able to decisively tilt the hearing in Facebook’s favor. With that said, the book certainly isn’t closed on American legislators drawing up ways to push back against the Libra.
In post-hearing comments to the press, Sen. Brown reaffirmed the social media giant was on nothing short of thin ice when it came to perceptions of its trustworthiness:
“Facebook has shown time after time after time it’s betrayed the public trust and I can’t imagine there’s anything that would make us trust them.”
Sure enough, the hearings show that #Libra's biggest problem is Facebook's trust deficit. No amount of ring-fencing, decentralizing consortium agreements or legal protections can remove the reality that the project is born of a company with an extremely fraught public reputation
— Michael J. Casey (@mikejcasey) July 16, 2019
Zooming out, Marcus will face the music again in short order, as he’s appearing for a similar oversight hearing in the House of Representatives on July 17th.
Notably, a draft bill was just put forth in the House that would block companies that make more than $25 billion USD in annual revenues — e.g. Facebook — from establishing a digital asset like the Libra.
In Separate Remarks, One U.S. Congressman Plugs Bitcoin
The Tuesday Senate Banking Committee hearing was predominantly focused on Libra, so little was said therein on bitcoin or other specific cryptocurrencies.
But in a CNBC interview the morning of the hearing, House Minority Leader Kevin McCarthy (R-CA) suggested the Libra was playing decentralization theater and that it couldn’t hold a candle to bitcoin in that regard:
“I like bitcoin […] the real thing I like when it comes to bitcoin is blockchain because I like the security. I want government to actually start using bitcoin and blockchain.”
The comments come after President Trump blasted the viability of cryptocurrencies last week.